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TDH Holdings, Inc.

TDH Holdings, Inc.PETZEarnings & Financial Report

Nasdaq · Consumer Staples

TDH Holdings, Inc. is a pet product enterprise that develops, manufactures and distributes a comprehensive portfolio of pet food, nutritional treats, and daily pet supplies for dogs and cats. Its primary market is mainland China, catering to both online e-commerce and offline physical retail customer segments.

What changed in TDH Holdings, Inc.'s 20-F — 2022 vs 2023

Top changes in TDH Holdings, Inc.'s 2023 20-F

319 paragraphs added · 446 removed · 225 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

47 edited+33 added−83 removed281 unchanged
The COVID-19 outbreak and spread further disrupted our business activities from the beginning of 2020 up to May 2020 when we resumed our business operations. These factors led to significant decrease in our petfood sales. On October 31, 2021, we acquired 51% equity interests of Far Ling’s Inc and 100% equity interests of Bo Ling’s Chinese Restaurant, Inc.
The COVID-19 outbreak and spread further disrupted our business activities from the beginning of 2020 up to May 2020 when we resumed our petfood business operations. These factors led to significant decrease in our petfood sales. On October 31, 2021, we acquired 51% equity interests of Far Ling’s Inc and 100% equity interests of Bo Ling’s Chinese Restaurant, Inc.
On July 5, 2021, the Chinese cybersecurity regulator launched the same investigation on two other Internet platforms, China’s Full Truck Alliance of Full Truck Alliance Co. Ltd. (NYSE: YMM) and Boss of KANZHUN LIMITED (Nasdaq: BZ).
On July 5, 2021, the Chinese cybersecurity regulator launched the same investigation on two other Internet platforms, China’s Full Truck Alliance of Full Truck Alliance Co. Ltd. (NYSE: YMM) and Boss of KANZHUN LIMITED (Nasdaq: BZ).
The PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used.
The PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used.
Our auditor is headquartered in California and was last inspected by the PCAOB in March 2023. According to our auditor, the PCAOB will conduct regular inspections.
Our auditor is headquartered in California and was last inspected by the PCAOB in March 2023. According to our auditor, the PCAOB will conduct regular inspections.
We do not believe that such measures will have any impact on our income derived from payment from our WFOE because: ● We do not fall within the scope of special access administrative measures for foreign investment admission as stipulated by the state, and therefore are not required to go through approval procedures. 17 ● The Establishment and Changes Provision regulates the recordation procedures relating to the establishment and changes of a foreign-invested enterprise, which including but not limited to: (i) the changes of company name, registered address, duration of operation, business scope, registered capital, total investment, shareholders, merger, division and termination of the enterprise; and (ii) the corporate name change, domicile or place of incorporation, subscribed capital, investment period.
We do not believe that such measures will have any impact on our income derived from payment from our WFOE because: ● We do not fall within the scope of special access administrative measures for foreign investment admission as stipulated by the state, and therefore are not required to go through approval procedures. 13 ● The Establishment and Changes Provision regulates the recordation procedures relating to the establishment and changes of a foreign-invested enterprise, which including but not limited to: (i) the changes of company name, registered address, duration of operation, business scope, registered capital, total investment, shareholders, merger, division and termination of the enterprise; and (ii) the corporate name change, domicile or place of incorporation, subscribed capital, investment period.
Due to the sharp rise in market price of raw materials, the lack of operational efficiency of our production facilities and our inability to make bank loan repayments upon maturity, we suspended our production and normal business operations and we were involved in certain legal proceedings beginning in November 2019.
Due to the sharp rise in market price of raw materials, the lack of operational efficiency of our production facilities and our inability to make bank loan repayments upon maturity, we suspended our production and normal petfood business operations and we were involved in certain legal proceedings beginning in November 2019.
However, if any of us is deemed to be a critical information infrastructure operator or a company that is engaged in data processing and holds personal information of more than one million users, we could be subject to PRC cybersecurity review. 14 As of the date hereof, we are of the view that we and our PRC subsidiaries are in compliance with the applicable PRC laws and regulations governing the data privacy and personal information in all material respects, including the data privacy and personal information requirements of the CAC, and we and our PRC subsidiaries have not received any complaints from any third party, or been investigated or punished by any PRC competent authority in relation to data privacy and personal information protection.
However, if any of us is deemed to be a critical information infrastructure operator or a company that is engaged in data processing and holds personal information of more than one million users, we could be subject to PRC cybersecurity review. 10 As of the date hereof, we are of the view that we and our PRC subsidiaries are in compliance with the applicable PRC laws and regulations governing the data privacy and personal information in all material respects, including the data privacy and personal information requirements of the CAC, and we and our PRC subsidiaries have not received any complaints from any third party, or been investigated or punished by any PRC competent authority in relation to data privacy and personal information protection.
The recent developments would add uncertainties to our listing and we cannot assure you whether Nasdaq Capital Market or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach, or experience as it relates to our audit. 21 The HFCA Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.
The recent developments would add uncertainties to our listing and we cannot assure you whether Nasdaq Capital Market or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach, or experience as it relates to our audit. 18 The HFCA Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.
There is no certainty as to how such review or prescribed actions would impact our operations and we cannot guarantee that any clearance can be obtained or any actions that may be required for our continued listing on the Nasdaq capital market and the offering as well can be taken in a timely manner, or at all. 13 In addition, according to the Personal Information Protection Law, where the purpose of the activity is to provide a product or service to that natural person located within China, such activity shall comply with the Personal Information Protection Law.
There is no certainty as to how such review or prescribed actions would impact our operations and we cannot guarantee that any clearance can be obtained or any actions that may be required for our continued listing on the Nasdaq capital market and the offering as well can be taken in a timely manner, or at all. 9 In addition, according to the Personal Information Protection Law, where the purpose of the activity is to provide a product or service to that natural person located within China, such activity shall comply with the Personal Information Protection Law.
If a customer of our restaurant becomes ill from foodborne illnesses or as a result of food safety issues, it may be temporarily closed, which would decrease our revenues. 8 Risks Related to Doing Business in China Because of our corporate structure, we as well as the investors are subject to unique risks due to uncertainty of the interpretation and the application of the PRC laws and regulations, including but not limited to limitation regulatory review of overseas listing of PRC companies through a special purpose vehicle.
If a customer of our restaurant becomes ill from foodborne illnesses or as a result of food safety issues, it may be temporarily closed, which would decrease our revenues. 4 Risks Related to Doing Business in China Because of our corporate structure, we as well as the investors are subject to unique risks due to uncertainty of the interpretation and the application of the PRC laws and regulations, including but not limited to limitation regulatory review of overseas listing of PRC companies through a special purpose vehicle.
Since this document is relatively new, uncertainties still exist in relation to how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our future business, results of operations, and the value of our securities. 12 Further, Chinese government continues to exert more oversight and control over Chinese technology firms.
Since this document is relatively new, uncertainties still exist in relation to how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our future business, results of operations, and the value of our securities. 8 Further, Chinese government continues to exert more oversight and control over Chinese technology firms.
Our auditor, YCM CPA Inc, has indicated in their report on the Company’s financial statements for the fiscal year ended December 31, 2022 that there is “substantial doubt about our ability to continue as a going concern”. A “going concern” opinion could impair our ability to finance our operations through the sale of equity, incurring debt, or other financing alternatives.
Our auditor, YCM CPA Inc., has indicated in their report on the Company’s financial statements for the fiscal year ended December 31, 2023 that there is “substantial doubt about our ability to continue as a going concern”. A “going concern” opinion could impair our ability to finance our operations through the sale of equity, incurring debt, or other financing alternatives.
The Draft Rules Regarding Overseas Listing aim to lay out the filing regulation arrangement for both direct and indirect overseas listing and clarify the determination criteria for indirect overseas listing in overseas markers. 11 The Draft Rules Regarding Overseas Listing, among other things, stipulate that, after making initial applications with overseas stock markets for initial public offerings or listings, all China-based companies shall file with the CSRC within three working days.
The Draft Rules Regarding Overseas Listing aim to lay out the filing regulation arrangement for both direct and indirect overseas listing and clarify the determination criteria for indirect overseas listing in overseas markers. 7 The Draft Rules Regarding Overseas Listing, among other things, stipulate that, after making initial applications with overseas stock markets for initial public offerings or listings, all China-based companies shall file with the CSRC within three working days.
Our auditor, the independent registered public accounting firm that issues the audit report for the year ended December 31, 2022 included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
Our auditor, the independent registered public accounting firm that issues the audit report for the year ended December 31, 2023 included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources, or at all. 24 If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Common Shares may decline.
This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources, or at all. 20 If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Common Shares may decline.
These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial conditions and results of operations. 22 If our financial condition deteriorates as a NASDAQ listed company, we may not meet continued listing standards on the NASDAQ Capital Market.
These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial conditions and results of operations. 19 If our financial condition deteriorates as a NASDAQ listed company, we may not meet continued listing standards on the NASDAQ Capital Market.
The PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes export restrictions on certain data an information. 10 In early July 2021, regulatory authorities in China launched cybersecurity investigations with regard to several China-based companies that are listed in the United States.
The PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes export restrictions on certain data an information. 6 In early July 2021, regulatory authorities in China launched cybersecurity investigations with regard to several China-based companies that are listed in the United States.
On August 10, 2020, the SEC announced that SEC Chairman had directed the SEC staff to prepare proposals in response to the PWG Report, and that the SEC was soliciting public comments and information with respect to these proposals. 20 On March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the Act.
On August 10, 2020, the SEC announced that SEC Chairman had directed the SEC staff to prepare proposals in response to the PWG Report, and that the SEC was soliciting public comments and information with respect to these proposals. 17 On March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the Act.
In addition, any litigation in China may be protracted and result in substantial costs and diversion of our resources and management attention. 9 The Chinese government exerts substantial influence over the manner in which we must conduct our business activities and may intervene or influence our operations at any time, which could result in a material change in our operations and the value of our Common Shares.
In addition, any litigation in China may be protracted and result in substantial costs and diversion of our resources and management attention. 5 The Chinese government exerts substantial influence over the manner in which we must conduct our business activities and may intervene or influence our operations at any time, which could result in a material change in our operations and the value of our Common Shares.
Thus, if the value of the foreign currency decreases before you actually convert the currency into U.S. dollars, you will be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that you will actually ultimately receive. 16 We may become a passive foreign investment company, which could result in adverse U.S. tax consequences to U.S. investors.
Thus, if the value of the foreign currency decreases before you actually convert the currency into U.S. dollars, you will be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that you will actually ultimately receive. 12 We may become a passive foreign investment company, which could result in adverse U.S. tax consequences to U.S. investors.
Accordingly, if we face future periods of decline in business activity generally or adverse economic periods specific to our business, these new laws can be expected to exacerbate the adverse effect of the economic environment on our results of operations and financial condition. 18 Changes in PRC’s political and economic policies could harm our business.
Accordingly, if we face future periods of decline in business activity generally or adverse economic periods specific to our business, these new laws can be expected to exacerbate the adverse effect of the economic environment on our results of operations and financial condition. 14 Changes in PRC’s political and economic policies could harm our business.
As a result, it could be difficult for investors to effect service of process in the U.S., or to enforce a judgment obtained in the U.S. against us or any of these persons. 15 We may be subject to PRC regulatory limitations on merger and acquisition (M&A) activities.
As a result, it could be difficult for investors to effect service of process in the U.S., or to enforce a judgment obtained in the U.S. against us or any of these persons. 11 We may be subject to PRC regulatory limitations on merger and acquisition (M&A) activities.
There are also common law rights for the protection of shareholders that may be invoked, largely dependent on English common law, since the common law of the British Virgin Islands for business companies is limited. 25 We may not be able to pay any dividends on our shares in the future due to British Virgin Islands law.
There are also common law rights for the protection of shareholders that may be invoked, largely dependent on English common law, since the common law of the British Virgin Islands for business companies is limited. 21 We may not be able to pay any dividends on our shares in the future due to British Virgin Islands law.
The claims raised in these lawsuits pertain to the Company’s non-payment of various invoices for supplier and vendor services rendered, with related interest and costs. As of the date of this report, in 44 cases, the creditors have reached civil conciliation letters with our company, and in 9 cases, the court has issued civil judgments.
The claims raised in these lawsuits pertain to the Company’s non-payment of various invoices for supplier and vendor services rendered, with related interest and costs. In 44 cases, the creditors have reached civil conciliation letters with our company, and in 9 cases, the court has issued civil judgments.
On October 31, 2021, we acquired 51% equity interests of Far Ling’s Inc. and 100% equity interests of Bo Ling’s Chinese Restaurant, Inc. This resulted in an increase of $0.6 million and $3.1 million in food service revenue for the years ended December 31, 2021 and 2022, respectively.
On October 31, 2021, we acquired 51% equity interests of Far Ling’s Inc. and 100% equity interests of Bo Ling’s Chinese Restaurant, Inc. This resulted in an increase of $3.1 million and $3.2 million in food service revenue for the years ended December 31, 2022 and 2023, respectively.
However, we discontinued our petfood manufacturing segment in the first quarter of 2023 and currently our revenue is substantially generated from the restaurant business segment. Our business turnaround currently depends, in part, on our ability to successfully introduce, manage and acquire new restaurants.
However, we fully discontinued our petfood manufacturing segment in 2023 and currently our revenue is substantially generated from the restaurant business segment. Our business turnaround currently depends, in part, on our ability to successfully introduce, manage and acquire new restaurants.
With respect to the remaining 4 cases, the plaintiffs withdrew the lawsuit because of lack of evidence. The mediation and judgment involved total claims of RMB13.86 million (USD$2.12 million). Such liabilities have been accrued and reflected in the consolidated financial statements for the year ended December 31, 2020.
With respect to the remaining 4 cases, the plaintiffs withdrew the lawsuits because of lack of evidence. The settlement and judgments involved total claims of RMB13.86 million (USD $2.12 million). Such liabilities have been accrued and reflected in the consolidated financial statements for the year ended December 31, 2020.
However, if our shares are listed on the NASDAQ Capital Market but are delisted from the NASDAQ Capital Market at some later date, our shareholders could find it difficult to sell our shares.
If our shares are delisted from the NASDAQ Capital Market at some later date, our shareholders could find it difficult to sell our shares.
The COVID-19 outbreak and spread further disrupted our business activities during the period from the beginning of 2020 up to May 2020 when we resumed our business operations. Historically, we reported recurring losses of approximately $0.87 million and $6.72 million for the years ended December 31, 2020 and 2021, respectively.
The COVID-19 outbreak and spread further disrupted our business activities during the period from the beginning of 2020 up to May 2020 when we resumed our business operations. Historically, we reported recurring losses of approximately $23.63 million and $0.86 million for the years ended December 31, 2023 and 2022, respectively.
On March 16, 2022, the People’s Court of Huangdao District, Qingdao City, Shandong Province made a civil ruling and announced the acceptance of creditors’ application of bankruptcy liquidation of Tiandihui, and it entered into bankruptcy proceedings. Accordingly, these legal claims are now subject to the bankruptcy proceedings.
On March 16, 2022, the People’s Court of Huangdao District, Qingdao City, Shandong Province made a civil ruling and announced the acceptance of creditors’ application of bankruptcy liquidation of Tiandihui, and it entered into bankruptcy proceedings.
As a result, we may not provide you the same information as U.S. domestic reporting companies or we may provide information at different times, which may make it more difficult for you to evaluate our performance and prospects. We are a foreign private issuer and, as a result, we are not subject to the same requirements as U.S. domestic issuers.
We are a “foreign private issuer,” and our disclosure obligations differ from those of U.S. domestic reporting companies. As a result, we may not provide you the same information as U.S. domestic reporting companies or we may provide information at different times, which may make it more difficult for you to evaluate our performance and prospects.
If we are not able to effectively manage and acquire new restaurants that successfully generate revenue, we may not be able to grow and maintain our business as anticipated, and our sales may decline and our business, financial condition and results of operations may be materially adversely affected. 5 We depend on our key personnel, and our business and growth prospects may be severely disrupted if we lose their services.
If we are not able to effectively manage and acquire new restaurants that successfully generate revenue, we may not be able to grow and maintain our business as anticipated, and our sales may decline and our business, financial condition and results of operations may be materially adversely affected.
Our continued success depends on our ability to build upon our historic strengths and competitive advantages. In order to do so, we need to anticipate and respond effectively to continuously shifting consumer demographics and trends in food sourcing, food preparation, food offerings, and consumer behavior and preferences, including with respect to environmental and social responsibility matters, in the IEO segment.
In order to do so, we need to anticipate and respond effectively to continuously shifting consumer demographics and trends in food sourcing, food preparation, food offerings, and consumer behavior and preferences, including with respect to environmental and social responsibility matters, in the IEO segment.
Our restaurant base is geographically concentrated in Missouri, and we could be negatively affected by conditions specific to this state. Bo Lings is located in Missouri. Adverse changes in demographic, unemployment, economic, regulatory or weather conditions in Missouri have had, and may continue to have, material adverse effects on our business, financial condition or results of operations.
Bo Lings is located in Missouri. Adverse changes in demographic, unemployment, economic, regulatory or weather conditions in Missouri have had, and may continue to have, material adverse effects on our business, financial condition or results of operations.
If our common shares are delisted from the NASDAQ Capital Market at some later date or become subject to the penny stock regulations, it is likely that the price of our shares would decline and that our shareholders would find it difficult to sell their shares. 23 We are a “foreign private issuer,” and our disclosure obligations differ from those of U.S. domestic reporting companies.
If our common shares are delisted from the NASDAQ Capital Market at some later date or become subject to the penny stock regulations, it is likely that the price of our shares would decline and that our shareholders would find it difficult to sell their shares.
Consumer perceptions may also be affected by adverse commentary from third parties, including through social media or conventional media outlets, regarding the IEO segment or our brand, culture, operations, suppliers or franchisees.
Consumer perceptions may also be affected by adverse commentary from third parties, including through social media or conventional media outlets, regarding the IEO segment or our brand, culture, operations, suppliers or franchisees. If we are unsuccessful in addressing adverse commentary or perceptions, whether or not accurate, our brand and financial results may suffer.
Worldwide market volatility, as well as general economic, market or political conditions, could reduce the market price of shares of our stock in spite of our operating performance.
The market price of shares may be volatile, which could cause the value of your investment to decline. Worldwide market volatility, as well as general economic, market or political conditions, could reduce the market price of shares of our stock in spite of our operating performance.
Our future success depends heavily upon the continued service of our key executives. We rely on their business, industry, financial and capital markets knowledge and experience.
We depend on our key personnel, and our business and growth prospects may be severely disrupted if we lose their services. Our future success depends heavily upon the continued service of our key executives. We rely on their business, industry, financial and capital markets knowledge and experience.
Under the Exchange Act, we will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue quarterly reports or proxy statements. We will not be required to disclose detailed individual executive compensation information.
We are a foreign private issuer and, as a result, we are not subject to the same requirements as U.S. domestic issuers. Under the Exchange Act, we will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies.
As of December 31, 2022, and as of the date of this filing, the bankruptcy proceedings have not been completed and are expected to be completed by the end of 2023. 3 The report of our independent registered public accounting firm on our financial statements includes an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern, and if our business is unable to continue it is likely investors will lose all of their investment.
To the extent any pre-bankruptcy liability still remains, the ultimate resolution of such claims and other obligations may have a material adverse effect on our future operating results, profitability and financial condition. 1 The report of our independent registered public accounting firm on our financial statements includes an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern, and if our business is unable to continue it is likely investors will lose all of their investment.
As discussed in Note 2 to the consolidated financial statements to this Annual Report, the Company discontinued its petfood business during the first quarter of 2023 and currently the Company’s revenue is substantially generated from the restaurant business segment. The Company’s business turnaround currently depends, in part, on its ability to successfully introduce manage and acquire new restaurants.
As discussed in Note 2 to the consolidated financial statements to this Annual Report, the Company fully discontinued its petfood business during 2023 because the Tiandihui bankruptcy process was concluded and all claims against Tiandihui were processed by December 27, 2023. Currently the Company’s revenue is substantially generated from the restaurant business segment.
Our future revenue and operating cash flows may be further affected by various pending lawsuits, legal claims, proceedings, arbitration and bankruptcy proceedings. In order to achieve profitability, among other factors, management must successfully execute our growth and restaurant operations in the markets on which we are focused.
If we are not able to effectively manage and acquire new restaurants that successfully generate revenue, we may not be able to grow and maintain our business as anticipated. In order to achieve profitability, among other factors, management must successfully execute our growth and restaurant operations in the markets on which we are focused.
As of December 31, 2022, and as of the date of this filing, the bankruptcy proceedings have not been completed and are expected to be completed by the end of 2023. We discontinued our petfood manufacturing segment and the turnaround of our business depends, in part, on our ability to successfully generate revenue in the restaurant segment.
If we are unable to successfully take necessary steps, we may be unable to sustain or increase our profitability in the future. 2 We discontinued our petfood manufacturing segment and the turnaround of our business depends, in part, on our ability to successfully generate revenue in the restaurant segment.
Risks Related to Our Business Legal claims by vendors could impair our ability to continue as a going concern. Since November 2019, the Company has been a subject of 57 lawsuits by its raw material supplies, printing and packaging supplies, transportation companies and other vendors.
The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Since November 2019, the Company has been a subject of 57 lawsuits by its raw material supplies, printing and packaging supplies, transportation companies and other vendors.
If we are unsuccessful in addressing adverse commentary or perceptions, whether or not accurate, our brand and financial results may suffer. 7 If we do not anticipate and address evolving consumer preferences and effectively execute our pricing, promotional and marketing plans, our business could suffer.
If we do not anticipate and address evolving consumer preferences and effectively execute our pricing, promotional and marketing plans, our business could suffer. Our continued success depends on our ability to build upon our historic strengths and competitive advantages.
This resulted in an increase of $0.6 million and $3.1 million in food service revenue for the years ended December 31, 2021 and 2022, respectively.
This resulted in an increase of $3.1 million and $3.2 million in food service revenue for the years ended December 31, 2022 and 2023, respectively. We discontinued our petfood business during the first quarter of 2023 and we fully disposed of Tiandihui because its bankruptcy process concluded and all claims against it were processed by December 27, 2023.
Shareholders will be dependent upon management for reports of their progress, development, activities and expenditure of proceeds. 19 Risks Related to the Ownership of Our Common Shares We are a holding company incorporated in the British Virgin Islands. As a holding company with no material operations of our own, we conduct a substantial majority of our operations through our subsidiaries.
As a holding company with no material operations of our own, we conduct a substantial majority of our operations through our subsidiaries.
Removed
As of December 31, 2022, and as of the date of this filing, the bankruptcy proceedings have not been completed and are expected to be completed by the end of 2023. 1 Various pending lawsuits, legal claims, proceedings and arbitrations could impair our ability to continue as a going concern.
Added
Risks Related to Our Business We may be subject to claims that were not discharged in Tiandihui’s bankruptcy proceedings, which could have a material adverse effect on our operating results and profitability. From time to time, the Company is a party to various legal actions arising in the ordinary course of business.
Removed
As of December 31, 2022, we had the following pending lawsuits, legal claims, proceedings and arbitrations: ● On December 2, 2019, Qingdao Lingang Real Estate Co., Ltd. (“QLRE”), filed a civil lawsuit against Tiandihui, Rongfeng Cui, and Yanjuan Wang.
Added
On November 3, 2023, another land use right and a factory building on the land owned by Tiandihui were auctioned by the court for $875,321 (RMB 6.28 million). On December 27, 2023, the court announced that the bankruptcy property distribution plan of Tiandihui had been implemented and the bankruptcy proceedings were complete.
Removed
The Company entered into a loan agreement with QLRE in 2018 and borrowed RMB20 million (USD3.18 million) from QLRE in connection with purchase of a factory. The loan was guaranteed by Rongfeng Cui and his wife, Yanjuan Wang. The Company failed to make repayment to QLRE.
Added
As a result, Tiandihui has been fully disposed as of December 31, 2023, and substantially all the material claims against Tiandihui that arose prior to the date of the bankruptcy completion were addressed. However, we may be subject to claims that were not discharged in the bankruptcy proceedings, if any.
Removed
On March 4, 2020, the Court ordered that: (i) the Company repay QLRE the principal amount of RMB20 million plus interest of RMB 550,000 accrued as of October 31, 2019.
Added
The Company’s business turnaround currently depends, in part, on its ability to successfully introduce, manage and acquire new restaurants.
Removed
The court ordered that the payment be made within 10 business days after the effective date of the court ruling, and also ordered that the Company pay interest at the rate of 2% per month for the period from the date of November 1, 2019 to the date of full discharge of the debt, as well as the litigation fee of RMB77,000 (USD$11,933).
Added
While we are not aware of any data breach in the past, cyber-attacks, computer viruses or any future failure to adequately maintain security and prevent unauthorized access to electronic and other confidential information could result in a data breach which could materially adversely affect our reputation, financial condition and operating results.
Removed
If the debt is not repaid within the required timeframe, interest shall be doubled from the effective date of court order until the date of full discharge of the debt. As of December 31, 2021, we have not satisfied the repayment to QLRE.
Added
As part of business operations, we collect, process, store and transmit our employees, business partners and other third party data. Our customers, business partners and employees expect we adequately safeguard and protect their sensitive personal and business information.
Removed
On March 16, 2022, the People’s Court of Huangdao District, Qingdao City, Shandong Province made a civil ruling and announced the acceptance of creditors’ application of bankruptcy liquidation of Tiandihui, and it entered into bankruptcy proceedings. Accordingly, these legal claims are now subject to the bankruptcy proceedings.
Added
We may experience cyber-attacks and other security incidents of varying degrees from time to time, and we may incur significant costs in protecting against or remediating such incidents. In addition, we are subject to a variety of laws and regulations in the PRC and other countries relating to cybersecurity and data protection.
Removed
As of December 31, 2022, and as of the date of this filing, the bankruptcy proceedings have not been completed and are expected to be completed by the end of 2023. ● On January 15, 2020, China Construction Bank (“CCB”), initiated a civil claim against Tiandihui, Rongfeng Cui, and Yanjuan Wang.
Added
Security breaches or unauthorized access to confidential information could also expose us to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity.
Removed
The plaintiff alleged that it executed a loan agreement with the Company in the amount of RMB19.93 million (USD3.08 million) for the purchase of manufacturing facility and the associated land use right located at Lingang Economic Development Zone, Huangdao District, Qingdao, Shandong Province, People’s Republic of China.
Added
If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in our technology infrastructure are exposed and exploited, our relationships with customers and cooperation partners could be severely damaged.
Removed
Rongfeng Cui and his wife, Yanjuan Wang, co-signed for this loan as personal guarantors subject to joint and several liability in connection with the loan. The loan with CCB was guaranteed by Rongfeng Cui and Yanjuan Wang, and secured by a pledge by the aforementioned manufacturing facilities and associated land use right.
Added
Affected third parties or government authorities could initiate legal or regulatory actions against us in connection with any actual or perceived security breaches or improper access to or disclosure of data, which could cause us to incur significant expense and liability, and our business and operations could be materially and adversely affected. 3 Risks Related to the Restaurant Segment Our restaurant base is geographically concentrated in Missouri, and we could be negatively affected by conditions specific to this state.
Removed
On April 14, 2020, the Court has ordered among other things that the Company repay RMB19.93 million (USD3.25 million) of principal and accrued interest to CCB, and to sell the mortgaged property.
Added
Shareholders will be dependent upon management for reports of their progress, development, activities and expenditure of proceeds. 15 Failure to comply with PRC laws and regulations related to labor and employee benefits may subject us to penalties or additional cost. Companies operating in China are required to comply with various laws and regulations related to labor and employment benefits.
Removed
On March 13, 2021, the land and factory buildings on the land owned by Tiandihui were auctioned by the court for $5,098,461 (RMB33.14 million), of which, $3,192,827 (RMB21.14 million) has been used to repay loan principal and accrued interest to CCB.
Added
For example, companies are required to participate in various government-sponsored employee benefit plans, including certain social insurance, housing provident funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of employees up to a maximum amount specified by the local government from time to time at locations where our employees are based.
Removed
The repayment was completed by April 2021. ● On November 11, 2019, Shanghai Pudong Development Bank Qingdao Branch (“SPDB”), filed a civil lawsuit against Tiandihui, Qingdao Saike Environmental Technology Co., Ltd. (“Saike”), Qingdao Gaochuang Technology Finance Guarantee Co., Ltd. (“Gaochuang”), Rongfeng Cui, and Yanjuan Wang.
Added
The requirement of employee benefit plans has not been implemented consistently by the local governments in China given the different levels of economic development in different locations.
Removed
In 2018, the Company entered into agreements with SPDB to borrow an aggregate of RMB4.85 million (USD0.75 million) from SPDB for working capital purpose. The Company failed to repay the debt upon maturity.
Added
Apart from that, if a company intends adopt flexible working hour arrangement and comprehensive working hour scheme, it shall fulfill the requirements in relevant regulations, and make filings with labor authorities, or the company will be subject to penalties and may be required to pay extra fees to its employees.
Removed
The borrowing from SPDB was guaranteed by Rongfeng Cui and Yanjuan Wang, and secure by a pledge of land use right and real property of Saike and certaim real property owned by Rongfeng Cui and Yanjuan Wang. The Company failed to make repayment to SPDB on the maturity date.
Added
As confirmed by the relevant local authorities and our directors, in no records of violation were found on PRC subsidiaries for social insurance and/or housing fund during 2023.
Removed
On October 24, 2020, the court has ordered the Company to repay SPDB the principal owed plus interest at the annual interest rate of 18.25%. The payment was required to be made within 10 business days after the effective date of the order.
Added
However, we cannot assure you that we have complied or will be able to comply with all labor-related law and regulations, including those relating to obligations to make social insurance payments, contribute to the housing provident funds, as well as make all filing for comprehensive working hour scheme.
Removed
If the debt was not paid within the required timeframe, interest doubled from the effective date of the court order until the date of full discharge of the debt. The Company is also required to pay litigation fees in the amount of RMB156,880 (USD 24,312). As of December 31, 2021, we have not satisfied the repayment to SPDB.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

33 edited+32 added−14 removed78 unchanged
ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company We started our company in 2002 in Qingdao, Shandong Province, PRC as a petfood company.
ITEM 4. INFORMATION ON THE COMPANY History and Development of the Company We started our company in 2002 in Qingdao, Shandong Province, PRC as a petfood company.
In connection with the foregoing transactions the Company executed Share Sale and Purchase Agreements (together, the “Agreements”) pursuant to which the Company agreed to pay approximately USD$ 936,782 and USD $156,130 (RMB 6 million and RMB 1 million), respectively, to acquire all of outstanding securities of TDH Group BVBA and TDH JAPAN, respectively, from the sole shareholder of each entity, Rongfeng Cui, the Company’s former CEO.
In connection with the foregoing transactions the Company executed Share Sale and Purchase Agreements (together, the “Agreements”) pursuant to which the Company agreed to pay approximately USD$ 936,782 and USD $156,130 (RMB 6 million and RMB 1 million), respectively, to acquire all of outstanding securities of TDH Group BVBA and TDH JAPAN, respectively, from the sole shareholder of each entity, Rongfeng Cui, the Company’s former CEO.
The purchase consideration under the Agreements was paid by issuance of 936,782 and 156,130 restricted common shares of the Company, respectively. Rongfeng Cui incorporated TDH Group BVBA in 2012 and TDH JAPAN in 2017 to develop and maintain all the clients in Europe and Japan, and to distribute and expand product sales in European and Japanese markets.
The purchase consideration under the Agreements was paid by issuance of 936,782 and 156,130 restricted common shares of the Company, respectively. Rongfeng Cui incorporated TDH Group BVBA in 2012 and TDH JAPAN in 2017 to develop and maintain all the clients in Europe and Japan, and to distribute and expand product sales in European and Japanese markets.
Effective August 2, 2019, Rongfeng Cui ceased to be Company’s CEO and Dandan Liu was appointed as the CEO in his stead. TDH Japan has been deregistered and dissolved in February 2021. As of the date of this filing, TDH Group BVBA is currently under bankruptcy proceeding. 26 On April 22, 2002 Tiandihui was incorporated in Qingdao City, PRC.
Effective August 2, 2019, Rongfeng Cui ceased to be Company’s CEO and Dandan Liu was appointed as the CEO in his stead. TDH Japan has been deregistered and dissolved in February 2021. As of the date of this filing, TDH Group BVBA is currently under bankruptcy proceeding. 22 On April 22, 2002 Tiandihui was incorporated in Qingdao City, PRC.
If we use our equity interest to purchase the assets or equity interest of a PRC company owned by PRC residents in the future, such PRC residents will be subject to the registration procedures described in Circular 37. 34 New M&A Regulations and Overseas Listings On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, the State Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, China Security Regulation Commission (CSRC) and SAFE, jointly issued the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the New M&A Rule, which became effective on September 8, 2006 and was amended on June 22, 2009.
If we use our equity interest to purchase the assets or equity interest of a PRC company owned by PRC residents in the future, such PRC residents will be subject to the registration procedures described in Circular 37. 30 New M&A Regulations and Overseas Listings On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, the State Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, China Security Regulation Commission (CSRC) and SAFE, jointly issued the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the New M&A Rule, which became effective on September 8, 2006 and was amended on June 22, 2009.
Such equity investment is subject to a series of laws and regulations generally applicable to any foreign-invested enterprise in China, which include the Wholly Foreign-owned Enterprise Law, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Contractual Joint Venture Enterprise Law, all as amended from time to time, and their respective implementing rules; the Administrative Provisions on Foreign Exchange in Domestic Direct Investment by Foreign Investors; and the Notice of the State Administration on Foreign Exchange on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment. 35 Under the aforesaid laws and regulations, the increase of the registered capital of a foreign-invested enterprise is subject to the prior approval by the original approval authority of its establishment.
Such equity investment is subject to a series of laws and regulations generally applicable to any foreign-invested enterprise in China, which include the Wholly Foreign-owned Enterprise Law, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Contractual Joint Venture Enterprise Law, all as amended from time to time, and their respective implementing rules; the Administrative Provisions on Foreign Exchange in Domestic Direct Investment by Foreign Investors; and the Notice of the State Administration on Foreign Exchange on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment. 31 Under the aforesaid laws and regulations, the increase of the registered capital of a foreign-invested enterprise is subject to the prior approval by the original approval authority of its establishment.
We priced our products to be accessible to the average consumer. 29 Due to the sharp rise in market price of raw materials, the lack of operational efficiency of our production facilities and our inability to make bank loan repayments upon maturity, we suspended our production and normal business operations and we were involved in certain legal proceedings beginning in November 2019.
We priced our products to be accessible to the average consumer. 25 Due to the sharp rise in market price of raw materials, the lack of operational efficiency of our production facilities and our inability to make bank loan repayments upon maturity, we suspended our production and normal business operations and we were involved in certain legal proceedings beginning in November 2019.
Bo Lings does not typically experience significant continuous shortages of supplies, and alternative sources for most of these supplies are generally available. 31 Seasonal Operations Bo Lings does not consider its operations to be seasonal to any material degree. Competition Competition in the restaurant industry is intense.
Bo Lings does not typically experience significant continuous shortages of supplies, and alternative sources for most of these supplies are generally available. 27 Seasonal Operations Bo Lings does not consider its operations to be seasonal to any material degree. Competition Competition in the restaurant industry is intense.
TDH Japan has been deregistered and dissolved in February 2021. As of the date of this filing, TDH Group BVBA is currently under bankruptcy proceeding. 32 Intellectual Property The PRC has domestic laws for the protection of rights in copyrights, patents, trademarks and trade secrets.
TDH Japan has been deregistered and dissolved in February 2021. As of the date of this filing, TDH Group BVBA is currently under bankruptcy proceeding. 28 Intellectual Property The PRC has domestic laws for the protection of rights in copyrights, patents, trademarks and trade secrets.
We focus on the development and innovation of new recipes and improvement of existing products. 30 Operating Strategy Our operating strategy is built on the following key components: ● Offering high quality, freshly prepared food: We place a great deal of emphasis on providing our guests with high quality, freshly prepared food.
We focus on the development and innovation of new recipes and improvement of existing products. 26 Operating Strategy Our operating strategy is built on the following key components: ● Offering high quality, freshly prepared food: We place a great deal of emphasis on providing our guests with high quality, freshly prepared food.
On October 31, 2021, TDH Income Corporation acquired 51% equity interests of Far Ling’s Inc. On October 31, 2021, TDH Income Corporation acquired 100% equity interests of Bo Ling’s Chinese Restaurant, Inc. On January 22, 2022, Beijing Wenxin was incorporated in Beijing City, PRC. On March 27, 2023, Qingdao Chihong was incorporated in Qingdao City, PRC.
On October 31, 2021, TDH Income Corporation acquired 100% equity interests of Bo Ling’s Chinese Restaurant, Inc. On January 22, 2022, Beijing Wenxin was incorporated in Beijing City, PRC. On March 27, 2023, Qingdao Chihong was incorporated in Qingdao City, PRC.
However, many such rules and regulations are subject to extensive interpretive power of governmental agencies and commissions, and there is substantial uncertainty regarding the future interpretation and application of these laws or regulations. 33 U.S. Restaurant Operation.
However, many such rules and regulations are subject to extensive interpretive power of governmental agencies and commissions, and there is substantial uncertainty regarding the future interpretation and application of these laws or regulations. 29 U.S. Restaurant Operation.
Although we resumed our operations in May 2020 factors including the Covid-19 pandemic, the increase in cost of raw materials required for production; accepting less orders in an attempt to avoid unprofitable orders and customers; and decreased demand for sales of petfood, led to a continuous decrease in our petfood revenue from $0.47 million in 2021 to only $0.02 million in 2022.
Although we resumed our operations in May 2020 factors including the Covid-19 pandemic, the increase in cost of raw materials required for production; accepting less orders in an attempt to avoid unprofitable orders and customers; and decreased demand for sales of petfood, led to a continuous decrease in our petfood revenue from $0.02 million in 2022 to $0 million in 2023.
During 2022, there were no material capital expenditures for environmental control facilities and no such material expenditures are anticipated . Human Capital Management Due to the discontinuation of out petfood manufacturing segment we have reduced our number of employees in response to those challenges. As of the date of this filing, we employ around 51 full-time employees.
During 2023, there were no material capital expenditures for environmental control facilities and no such material expenditures are anticipated . Human Capital Management Due to the discontinuation of out petfood manufacturing segment we have reduced our number of employees in response to those challenges. As of the date of this filing, we employ around 56 full-time employees.
This resulted in an increase of $0.6 million and $3.1 million in restaurant food service revenue for the years ended December 31, 2021 and 2022, respectively. In addition, we decided to discontinue our petfood manufacturing business segment in the first quarter of 2023 due to the above operational challenges and to focus on our restaurant segment.
This resulted in an increase of $3.1 million and $3.2 million in restaurant food service revenue for the years ended December 31, 2022 and 2023, respectively. In addition, we decided to discontinue our petfood manufacturing business segment in the first quarter of 2023 due to the above operational challenges and to focus on our restaurant segment.
Business Overview Special Considerations We are not a Chinese operating company but a British Virgin Islands holding company with operations conducted by our subsidiaries established in Missouri, Nevada, PRC, Belgium, and Hong Kong.
Business Overview Special Considerations Implications of the HFCA Act We are not a Chinese operating company but a British Virgin Islands holding company with operations conducted by our subsidiaries established in Missouri, Nevada, PRC, Belgium, and Hong Kong.
Our PRC counsel has advised us that, based on their understanding of the current PRC laws and regulations: ● We currently control the Operating Companies by virtue of TDH HK Holding acquiring 100% of the equity interests of Tiandihui, which are regulated by the New M&A Rule.
Our PRC counsel has advised us that, based on their understanding of the current PRC laws and regulations: ● We currently control PRC operating companies by virtue of TDH Foods Limited acquiring 100% of the equity interests of Tiandihui Pet Foodstuffs, which are regulated by the New M&A Rule.
Furthermore, the total amount of foreign debts that can be borrowed by such PRC subsidiaries, including any shareholder loans, shall not exceed the difference between the total investment amount and the registered capital amount of the PRC subsidiaries, both of which are subject to the governmental approval.
Furthermore, the total amount of foreign debts that can be borrowed by such PRC subsidiaries, including any shareholder loans, shall not exceed the difference between the total investment amount and the registered capital amount of the PRC subsidiaries, both of which are subject to the governmental approval. ITEM 4A. UNRESOLVED STAFF COMMENTS Not applicable.
Tiandihui Foodstuffs Sales is a wholly owned subsidiary of Tiandihui Pet Foodstuffs. On February 27, 2020, TDH Foods Limited was incorporated in Hong Kong, with the purpose of being a holding company for equity interests in Tiandihui Pet Foodstuffs. TDH Foods Limited does conduct any operations or own any material assets or liabilities.
On February 27, 2020, TDH Foods Limited was incorporated in Hong Kong, with the purpose of being a holding company for equity interests in Tiandihui Pet Foodstuffs. TDH Foods Limited does conduct any operations or own any material assets or liabilities. On August 24, 2020, TDH Holdings, Inc. acquired 100% equity interests of TDH Foods Limited.
(“Qingdao Chihong”) was incorporated in Qingdao City, PRC. 27 Recent Developments Discontinued operations We discontinued our petfood manufacturing segment during the first quarter of 2023.
(“Beijing Wenxin”) was incorporated in Beijing City, PRC. On March 27, 2023, Qingdao Chihong Information Consulting Co., Ltd. (“Qingdao Chihong”) was incorporated in Qingdao City, PRC. Recent Developments Discontinued operations We discontinued our petfood manufacturing segment during the first quarter of 2023.
As a result, TDH Income became a wholly-owned subsidiary of TDH Holdings, Inc. On June 9, 2021, Ruby21Noland LLC (“Ruby21Noland”) was incorporated in Missouri. Ruby21Noland is a wholly owned subsidiary of TDH Income. On October 31, 2021, TDH Income Corporation acquired 51% equity interests of Far Ling’s Inc.
On June 9, 2021, Ruby21Noland LLC (“Ruby21Noland”) was incorporated in Missouri. Ruby21Noland is a wholly owned subsidiary of TDH Income. On October 31, 2021, TDH Income Corporation acquired 51% equity interests of Far Ling’s Inc. On October 31, 2021, TDH Income Corporation acquired 100% equity interests of Bo Ling’s Chinese Restaurant, Inc. On January 22, 2022, Beijing Wenxin Co., Ltd.
Additionally, our remaining petfood production facility became subject to a bankruptcy proceeding and was frozen by the court in 2022. Accordingly, we sought strategic alternatives to the petfood industry and entered the restaurant segment on October 31, 2021, when we acquired 51% equity interests of Far Ling’s Inc and 100% equity interests of Bo Ling’s Chinese Restaurant, Inc.
Accordingly, we sought strategic alternatives to the petfood industry and entered the restaurant segment on October 31, 2021, when we acquired 51% equity interests of Far Ling’s Inc and 100% equity interests of Bo Ling’s Chinese Restaurant, Inc.
Overview Petfood Manufacturing We started our company in 2002 in Qingdao, Shandong Province, PRC with a single mission of becoming a producer of high-quality petfood for pet owners in China and worldwide.
We have not installed any cash management policies that dictate the amount of such funds and how such funds are transferred. Overview Petfood Manufacturing We started our company in 2002 in Qingdao, Shandong Province, PRC with a single mission of becoming a producer of high-quality petfood for pet owners in China and worldwide.
As of the date of this filing, Qingdao Tiandihui Foodstuffs Co., Ltd is currently under bankruptcy proceeding. On January 22, 2020, Qingdao Tiandihui Pet Foodstuffs Co., Ltd. (“Tiandihui Pet Foodstuffs”) was incorporated in Qingdao City, PRC. On January 21, 2020, Qingdao Tiandihui Foodstuffs Sales Co., Ltd. (“Tiandihui Foodstuffs Sales”) was incorporated in Qingdao City, PRC.
On January 22, 2020, Qingdao Tiandihui Pet Foodstuffs Co., Ltd. (“Tiandihui Pet Foodstuffs”) was incorporated in Qingdao City, PRC. On January 21, 2020, Qingdao Tiandihui Foodstuffs Sales Co., Ltd. (“Tiandihui Foodstuffs Sales”) was incorporated in Qingdao City, PRC. Tiandihui Foodstuffs Sales is a wholly owned subsidiary of Tiandihui Pet Foodstuffs.
We believe the discontinuation of our petfood manufacturing business will provide us with the opportunity to redirect our focus and resources towards expanding and improving our restaurant segment.
We believe the discontinuation of our petfood manufacturing business will provide us with the opportunity to redirect our focus and resources towards expanding and improving our restaurant segment. 23 On December 27, 2023, the court announced that the bankruptcy property distribution plan of Tiandihui was implemented and the bankruptcy proceedings were completed.
Restaurant Segment On October 31, 2021, the Company completed the acquisition of 51% equity interests of Far Ling’s Inc. and 100% equity interests of Bo Ling’s Chinese Restaurant, Inc. The acquisition brought a new revenue source for the Company. Bo Lings Chinese Restaurant, which was founded by Richard (Bo) and Far Ling (Ling) Ng, husband and wife, in 1981.
As a result, Tiandihui has been fully disposed as of December 31, 2023. Restaurant Segment On October 31, 2021, the Company completed the acquisition of 51% equity interests of Far Ling’s Inc. and 100% equity interests of Bo Ling’s Chinese Restaurant, Inc. The acquisition brought a new revenue source for the Company.
TDH Petfood LLC had no active business operations since its incorporation, and it has been deregistered and dissolved in 2021. On June 4, 2021, TDH Income Corporation (“TDH Income”) was incorporated in Nevada. TDH Holdings, Inc. owns a 99.99% interest in TDH Income, and in December 2021, TDH Holdings, Inc. acquired the remaining 0.01% interest in TDH Income.
On June 4, 2021, TDH Income Corporation (“TDH Income”) was incorporated in Nevada. TDH Holdings, Inc. owns a 99.99% interest in TDH Income, and in December 2021, TDH Holdings, Inc. acquired the remaining 0.01% interest in TDH Income. As a result, TDH Income became a wholly-owned subsidiary of TDH Holdings, Inc.
Our principal executive office is located at Qingdao Tiandihui Pet Foodstuff Co., Ltd., 2521 Tiejueshan Road, Huangdao District, Qingdao, Shandong Province, PRC. Our telephone number is +86 532-8615-7918. Our website address is www.tiandihui.com. The information on our website is not part of this Annual Report.
Our principal executive office is located at Beijing Wenxin Co., Ltd., Room 1104, Full Tower, 9 East Third Ring Middle Road, Chaoyang District, Beijing, PRC. Our telephone number is +86- 166-7863-6230 . Our website address is www.tiandihui.com. The information on our website is not part of this Annual Report.
Today there are 5 Bo Lings Chinese Restaurants in the Kansas City area, as well as a warehouse for distribution of supplies. All Bo Lings restaurants are full service that include a dining area, bar, carry out menu and offer catering services.
All Bo Lings restaurants are full service that include a dining area, bar, carry out menu and offer catering services. The location we purchased is in Kansas City and offers a full Cantonese Dim Sum menu and space for banquets. Most of the menu items are prepared onsite in the kitchen and cooked to order.
On August 24, 2020, TDH Holdings, Inc. acquired 100% equity interests of TDH Foods Limited. In December 2020, TDH Holdings Inc. acquired remaining 1% equity interest of TDH Petfood LLC. As a result, TDH Petfood LLC became a wholly-owned subsidiary of TDH Holdings, Inc.
In December 2020, TDH Holdings Inc. acquired remaining 1% equity interest of TDH Petfood LLC. As a result, TDH Petfood LLC became a wholly-owned subsidiary of TDH Holdings, Inc. TDH Petfood LLC had no active business operations since its incorporation, and it has been deregistered and dissolved in 2021.
TDH HK Limited owns 100% of the outstanding capital stock of Tiandihui Pet Foodstuffs, with its wholly-owned subsidiary of Beijing Chongai Jiujiu Cultural Communication Co., Ltd. TDH Income Corporation owns 100% of the outstanding capital stock of Ruby21Noland LLC. Ruby21Noland LLC was incorporated in the State of Missouri on June 9, 2021.
TDH HK Limited owns 100% of the outstanding capital stock of Tiandihui Pet Foodstuffs, with its wholly-owned subsidiary of Beijing Chongai Jiujiu Cultural Communication Co., Ltd. On December 27, 2023, the court announced that the bankruptcy property distribution plan of Tiandihui was implemented and the bankruptcy proceedings were completed, and we fully disposed Tiandihui.
In addition, in 2022 our remaining petfood manufacturing facility was frozen by court order and became subject to Tiandihui’s bankruptcy proceeding. Our Bo Lings restaurant is located at 4701 Jefferson St, Kansas City, Missouri 64112.
In addition, on November 3, 2023, our remaining pet food manufacturing facility was auctioned by the court for $875,321 (RMB6.28 million) to pay off bankruptcy debts. Our Bo Lings restaurant is located at 4701 Jefferson St, Kansas City, Missouri 64112.
Over the years, we believe Bo Lings has built a reputation as one of the best Chinese restaurants in the Kansas City area. Currently, no other Chinese Restaurant has 2 or more restaurants in our area.
Business is managed by Richard and Far Ling with a team of employees in each restaurant, including bookkeepers, a marketing manager and a purchasing director. Over the years, we believe Bo Lings has built a reputation as one of the best Chinese restaurants in the Kansas City area.
Removed
On October 31, 2021, TDH Income Corporation acquired 100% equity interests of Bo Ling’s Chinese Restaurant, Inc. On January 22, 2022, Beijing Wenxin Co., Ltd. (“Beijing Wenxin”) was incorporated in Beijing City, PRC. On March 27, 2023, Qingdao Chihong Information Consulting Co., Ltd.
Added
On March 16, 2022, the People’s Court of Huangdao District, Qingdao City, Shandong Province made a civil ruling and announced the acceptance of creditors’ application of bankruptcy liquidation of Tiandihui and it entered into bankruptcy proceedings. On December 27, 2023, the Court announced that the bankruptcy property distribution plan of Tiandihui was implemented and the bankruptcy proceedings were completed.
Removed
Nasdaq Compliance Matters On February 23, 2022, the Company received a notification letter from Nasdaq Listing Qualifications advising the Company that based upon the closing bid price for the Company’s common shares for the past 30 consecutive business days, the Company no longer met the minimum $1.00 per share Nasdaq continued listing requirement set forth in Nasdaq Listing Rule 5550(a)(2).
Added
As a result, Tiandihui has been fully disposed as of December 31, 2023. On July 19, 2016, Tiandihui acquired 100% shares of Chongai Jiujiu from Rongfeng Cui and Yanjuan Wang for $87,849 (RMB 610,000). The acquisition of Chongai Jiujiu was a transaction between entities under common control. Chongai Jiujiu had immaterial operations and suffered recurring operating losses since its inception.
Removed
The notification also stated that the Company would be provided 180 calendar days, or until August 22, 2022, to regain compliance with the foregoing listing requirement. To do so, the bid price of the Company’s common stock must close at or above $1.00 per share for a minimum of 10 consecutive business days prior to that date.
Added
In December 2023, the Company transferred all its ownership interests in Chongai Jiujiu to a third party. The disposition of Chongai Jiujiu did not represent a strategic shift of the Company’s business due to immateriality, accordingly, the discontinued operations of Chongai Jiujiu are not presented and disclosed in this Annual Report.
Removed
On June 14, 2022, our Board approved to effect a reverse stock split of our common shares at the ratio of one-for-twenty with the market effective date of June 14, 2022. The objective of the reverse stock split was to enable our Company to regain compliance with NASDAQ Marketplace Rule 5550(a)(2) and maintain its listing on Nasdaq.
Added
Due to the completion of Tiandihui’s bankruptcy proceedings, all the claims against it were concluded. As a result, Tiandihui has been fully disposed as of December 31, 2023, and all the material claims against Tiandihui that arose prior to the date of the bankruptcy completion were addressed.
Removed
As a result of the reverse stock split, each twenty common shares outstanding automatically combined and converted to one issued and outstanding common share without any action on the part of the shareholder.
Added
Cash Flows through Our Organization We are a holding company with no operations of its own. We conduct our operations principally in the United States and China through our subsidiaries. As a result, we may rely upon dividends paid to us by our subsidiaries in the PRC to pay dividends and to finance any debt we may incur.
Removed
Subsequent to the reverse stock split, Nasdaq determined that for 10 consecutive business days, the closing bid price of the Company’s common shares was at $1.00 per share or greater. On June 29, 2022, Nasdaq notified the Company that it has regained compliance with Listing Rule 5550(a)(2) and closed the matter.
Added
As of the date of this report, none of our subsidiaries has issued any dividends or distributions to us and we have not made any dividends or distributions to our shareholders. Our subsidiaries in the PRC generate and retain cash generated from operating activities and re-invest it in our business.
Removed
Recent Private Placement On July 26, 2022, we completed a private placement of securities, and entered into a securities purchase agreement with eight accredited investors pursuant to which we sold to the investors an aggregate 4,000,000 of our common shares, at a price of $1.50 per share and warrants at a price of $0.01 per warrant to purchase up to an aggregate 4,000,000 of our common shares, for gross proceeds of $6,040,000.
Added
Current PRC regulations permit our subsidiaries in mainland China to pay dividends to the Company only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations.
Removed
The warrants have an exercise price of $2.44 per share, and a term of two years. The warrants are immediately exercisable upon issuance and have a cashless exercise feature.
Added
Under our current corporate structure, we rely on dividend payments or other distributions from our subsidiaries to fund any cash and financing requirements we may have, including the funds necessary to pay dividends and other cash distributions to our shareholders or to service any debt we may incur.
Removed
The securities were sold without registration under the Securities Act of 1933 in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and rules promulgated under the Securities Act as sales to accredited investors.
Added
If any subsidiary incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to us.
Removed
The Company’s intention was to use the proceeds of this offering for working capital and general working purposes. There were no discounts or brokerage fees associated with this offering. 28 B.
Added
In addition, under PRC laws and regulations, each of our Chinese subsidiaries is required to set aside a portion of their net income each year to fund a statutory surplus reserve until such reserve reaches 50% of its registered capital. This reserve is not distributable as dividends.
Removed
The location we purchased is in Kansas City and offers a full Cantonese Dim Sum menu and space for banquets. Most of the menu items are prepared onsite in the kitchen and cooked to order. Business is managed by Richard and Far Ling with a team of employees in each restaurant, including bookkeepers, a marketing manager and a purchasing director.
Added
As a result, our PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to us in the form of dividends, loans or advances. Further, the PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC.
Removed
At the time of our equity interest acquisition, as the acquiree, Tiandihui was not related to or connected with the foreign investor, or the acquirer, TDH HK Holding. Accordingly, we did not need the approval from Ministry of Commerce.
Added
Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any.
Removed
In addition, we have received all relevant approvals and certificates required for the acquisition. ● We currently control the Operating Companies by virtue of TDH Foods Limited acquiring 100% of the equity interests of Tiandihui Pet Foodstuffs, which are regulated by the New M&A Rule.
Added
If we are unable to receive funds from our subsidiaries, we may be unable to pay cash dividends on our common shares. 24 Cash dividends, if any, on our common shares will be paid in U.S. dollars.
Removed
According to the New M&A Rule, when a domestic company or a domestic natural person, through an overseas company established or controlled by it, to acquire a domestic company’s equity interest which is related to or connected with it, approval from Ministry of Commerce is required.
Added
If we are considered a PRC tax resident enterprise for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10%. A 10% PRC withholding tax is applicable to dividends payable to investors that are non-resident enterprises.
Added
Any gain realized on the transfer of common shares by such investors is also subject to PRC tax at a current rate of 10% which in the case of dividends will be withheld at source if such gain is regarded as income derived from sources within the PRC.
Added
Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC resident enterprise.
Added
However, the 5% withholding tax rate does not automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong resident enterprise must be the beneficial owner of the relevant dividends; and (b) the Hong Kong resident enterprise must directly hold no less than 25% share ownership in a PRC entity during the 12 consecutive months preceding its receipt of the dividends.
Added
In current practice, a Hong Kong entity must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate.
Added
As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot be certain that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to dividends to be paid by our PRC subsidiaries to our Hong Kong subsidiaries.
Added
As of the date of this report, we have not applied for the tax resident certificate from the relevant Hong Kong tax authority. Our Hong Kong subsidiaries intend to apply for the tax resident certificate when our subsidiaries in mainland China plan to declare and pay dividends to their Hong Kong parent companies.
Added
As an offshore holding company, we will be permitted under PRC laws and regulations to provide funding from the proceeds of our offshore fund-raising activities to our subsidiaries in China only through loans or capital contributions, subject to the satisfaction of the applicable government registration and approval requirements.
Added
Before providing loans to our PRC subsidiaries, we will be required to make filings about details of the loans with the State Administration of Foreign Exchange of the PRC (the “SAFE”) in accordance with relevant PRC laws and regulations.
Added
Our PRC subsidiaries that receive the loans are only allowed to use the loans for the purposes set forth in these laws and regulations.
Added
Under regulations of the SAFE, Renminbi is not convertible into foreign currencies for capital account items, such as loans, repatriation of investments and investments outside of China, unless the prior approval of the SAFE is obtained and prior registration with the SAFE is made.
Added
Under PRC law, we may provide funding to our PRC subsidiaries only through capital contributions or loans, and prior to the dismantling of our PRC consolidated affiliated entities only through loans to our former consolidated affiliated entities, subject to satisfaction of applicable government registration and approval requirements.
Added
For the year ended December 31, 2023, we provided working capital loans of $0 million in aggregate to our subsidiaries. We have not declared or paid any cash dividends, nor do we have any present plan to pay any cash dividends on our common shares in the foreseeable future.
Added
We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business. As of the date of this report, we do not anticipate any difficulties on our ability to transfer cash between subsidiaries.
Added
On March 16, 2022, the People’s Court of Huangdao District, Qingdao City, Shandong Province made a civil ruling and announced the acceptance of creditors’ application of bankruptcy liquidation of Tiandihui, and it entered into bankruptcy proceedings.
Added
On November 3, 2023, our remaining pet food manufacturing facility was auctioned by the court for $875,321 (RMB 6.28 million) to pay off bankruptcy debts. On December 27, 2023, the Court announced that the bankruptcy property distribution plan of Tiandihui was implemented and the bankruptcy proceedings were completed.
Added
Bo Lings Chinese Restaurant, which was founded by Richard (Bo) and Far Ling (Ling) Ng, husband and wife, in 1981. Today there are 5 Bo Lings Chinese Restaurants in the Kansas City area, as well as a warehouse for distribution of supplies.
Added
Currently, no other Chinese Restaurant has 2 or more restaurants in our area.
Added
In December 2023, the Company transferred all its ownership interests in Chongai Jiujiu to a third party. TDH Income Corporation owns 100% of the outstanding capital stock of Ruby21Noland LLC. Ruby21Noland LLC was incorporated in the State of Missouri on June 9, 2021. On October 31, 2021, TDH Income Corporation acquired 51% equity interests of Far Ling’s Inc.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

111 edited+26 added−122 removed122 unchanged
Due to the sharp rise in market price of raw materials, the lack of operational efficiency of our production facilities and our inability to make bank loan repayments upon maturity, we suspended our production and normal business operations and we were involved in certain legal proceedings beginning in November 2019.
Due to the sharp rise in market price of raw materials, the lack of operational efficiency of our production facilities and our inability to make bank loan repayments upon maturity, we suspended our production and normal business operations and we were involved in certain legal proceedings beginning in November 2019.
Gross margin from continuing operations Our gross margin from continuing operations was 33.97% for the year ended December 31, 2022, compared with gross margin of 28.78% for the year ended December 31, 2021.
Our gross margin from continuing operations was 33.97% for the year ended December 31, 2022, compared with gross margin of 28.78% for the year ended December 31, 2021.
An off-balance sheet arrangement means a transaction, agreement or contractual arrangement to which any entity that is not consolidated with us is a party, under which we have: ● Any obligation under certain guarantee contracts, ● Any retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets, ● Any obligation under a contract that would be accounted for as a derivative instrument, except that it is both indexed to our stock and classified in shareholder equity in our statement of financial position, and ● Any obligation arising out of a material variable interest held by us in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or engages in leasing, hedging or research and development services with us. 57 We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations.
An off-balance sheet arrangement means a transaction, agreement or contractual arrangement to which any entity that is not consolidated with us is a party, under which we have: ● Any obligation under certain guarantee contracts, ● Any retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets, ● Any obligation under a contract that would be accounted for as a derivative instrument, except that it is both indexed to our stock and classified in shareholder equity in our statement of financial position, and ● Any obligation arising out of a material variable interest held by us in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or engages in leasing, hedging or research and development services with us. 49 We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations.
There can be no assurance these strategies will be effective, and some strategies may be effective at improving some metrics while adversely affecting other metrics, which could have the overall effect of harming our business. 42 Loss of key personnel. Our revenue was derived from our competitive advantages in our products.
There can be no assurance these strategies will be effective, and some strategies may be effective at improving some metrics while adversely affecting other metrics, which could have the overall effect of harming our business. Loss of key personnel. Our revenue was derived from our competitive advantages in our products.
The resulting translation adjustments are included in determining other comprehensive income or loss. Transaction gains and losses are reflected in the consolidated statements of operations. 60 The exchange rates used to translate amounts in RMB into U.S.
The resulting translation adjustments are included in determining other comprehensive income or loss. Transaction gains and losses are reflected in the consolidated statements of operations. The exchange rates used to translate amounts in RMB into U.S.
We rely heavily on the expertise and leadership of our senior management to maintain our core competence. The loss of the service of any of our key personnel could adversely affect our business. Macro-economic conditions.
We rely heavily on the expertise and leadership of our senior management to maintain our core competence. The loss of the service of any of our key personnel could adversely affect our business. 35 Macro-economic conditions.
Our decision to discontinue our petfood business was driven largely by the following factors: the increase in cost of raw materials required for production; accepting less orders in an attempt to avoid unprofitable orders and customers; decreased demand for sales of petfood; its historical performance and expected business forecasts in the absence of further capital investments and opportunity costs; lawsuits and the closing of our manufacturing facilities and them being subject to bankruptcy proceedings.
Our decision to discontinue our petfood business was driven largely by the following factors: the increase in cost of raw materials required for production; accepting less orders in an attempt to avoid unprofitable orders and customers; decreased demand for sales of petfood; its historical performance and expected business forecasts in the absence of further capital investments and opportunity costs; lawsuits and the closing of our manufacturing facilities and them being subject to the bankruptcy proceeding.
We evaluate the recoverability of our inventory based on assumption about expected demand, market conditions, forecasts prepared by its customers, sales contracts and orders in hand. 58 Impairment of Long-Lived Assets and Goodwill The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually.
We evaluate the recoverability of our inventory based on assumption about expected demand, market conditions, forecasts prepared by its customers, sales contracts and orders in hand. 50 Impairment of Long-Lived Assets and Goodwill The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually.
The availability of these other sources of financing will depend upon our financial condition and results of operations as well as prevailing market conditions, and may not be available on terms reasonably acceptable to us or at all. 52 Regulatory Restrictions on Capital Injections We used proceeds from our initial public offering and subsequent offerings to fund our business.
The availability of these other sources of financing will depend upon our financial condition and results of operations as well as prevailing market conditions, and may not be available on terms reasonably acceptable to us or at all. 44 Regulatory Restrictions on Capital Injections We used proceeds from our initial public offering and subsequent offerings to fund our business.
Although we resumed our operations in May 2020 factors including the Covid-19 pandemic, the increase in cost of raw materials required for production; accepting less orders in an attempt to avoid unprofitable orders and customers; and decreased demand for sales of petfood, led to a decrease in our petfood revenue from $0.8 million in 2020, to $0.47 million in 2021 and to only $0.02 million in 2022.
Although we resumed our operations in May 2020 factors including the Covid-19 pandemic, the increase in cost of raw materials required for production; accepting less orders in an attempt to avoid unprofitable orders and customers; and decreased demand for sales of petfood, led to a decrease in our petfood revenue from $0.47 million in 2021, to $0.02 million in 2022 and to only $0 million in 2023.
Although we resumed our operations in May 2020 factors including the COVID-19 pandemic, the increase in cost of raw materials required for production; accepting less orders in an attempt to avoid unprofitable orders and customers; and decreased demand for sales of petfood, led to a decrease in our petfood revenue from $0.8 million in 2020, to $0.47 million in 2021 and to only $0.02 million in 2022.
Although we resumed our operations in May 2020 factors including the COVID-19 pandemic, the increase in cost of raw materials required for production; accepting less orders in an attempt to avoid unprofitable orders and customers; and decreased demand for sales of petfood, led to a decrease in our petfood revenue from $0.47 million in 2021, to $0.02 million in 2022 and to only $0 million in 2023.
Additionally, our remaining petfood production facility was frozen by the court and became subject to a bankruptcy proceeding in 2022. We decided to discontinue our petfood manufacturing business segment in the first quarter 2023 due to the above operational challenges On the other hand, revenue from our restaurant business segment increased by $2,467,544 or 407% when comparing 2022 to 2021.
Additionally, our remaining petfood production facility was frozen by the court and became subject to Tiandihui’s bankruptcy proceeding in 2022. We decided to discontinue our petfood manufacturing business segment in the first quarter 2023 due to the above operational challenges. On the other hand, revenue from our restaurant business segment increased by $2,467,544 or 407% when comparing 2022 to 2021.
In such cases, there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including eventual loss, fine, penalty or business impact, if any. 59 Revenue Recognition Revenue is measured according to ASC Topic 606, Revenue from Contracts with Customers. The Company currently generated revenue from two sources: sales of petfood products and revenue from restaurant business operation.
In such cases, there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including eventual loss, fine, penalty or business impact, if any. 51 Revenue Recognition Revenue is measured according to ASC Topic 606, Revenue from Contracts with Customers. The Company currently generated revenue from two sources: sales of petfood products and revenue from restaurant business operation.
In addition, our petfood manufacturing activities were suspended in 2022 because our remaining petfood production facility was frozen by the court and became subject to a bankruptcy proceeding. On the other hand, on October 31, 2021, we acquired 51% equity interests of Far Ling’s Inc and 100% equity interests of Bo Ling’s Chinese Restaurant, Inc.
In addition, our petfood manufacturing activities were suspended in 2022 because our remaining petfood production facility was frozen by the court and became subject to Tiandihui’s bankruptcy proceeding. On the other hand, on October 31, 2021, we acquired 51% equity interests of Far Ling’s Inc and 100% equity interests of Bo Ling’s Chinese Restaurant, Inc.
The Company does not have finance lease arrangements as of December 31, 2022 and 2021. Loss Contingencies The Company records accruals for certain of its outstanding legal proceedings or claims when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated.
The Company does not have finance lease arrangements as of December 31, 2023 and 2022. Loss Contingencies The Company records accruals for certain of its outstanding legal proceedings or claims when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated.
The information on our website is not part of this Annual Report. 36 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this annual filing.
The information on our website is not part of this Annual Report. 32 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this annual filing.
Our shipping and handling expense includes domestic freight, overseas freight, domestic express shipping fee. In order to reduce shipping and handling cost, we are trying to negotiate with and establish closer cooperation with several shipping companies providing express shipping services in order to lock favorable fee rates and reduce the domestic express fees. Research and Development expense.
Our shipping and handling expense includes domestic freight, overseas freight, domestic express shipping fee. In order to reduce shipping and handling cost, we are trying to negotiate with and establish closer cooperation with several shipping companies providing express shipping services in order to lock favorable fee rates and reduce the domestic express fees.
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 Overall, in terms of revenue from our continuing operations, our petfood sales to China domestic market and overseas market both significantly decreased in 2021 as compared to 2020, mainly due to decreased sales volume of our products as affected by the negative impact of COVID-19 (coronavirus) as discussed above, as well as decrease in sales orders, and our unfavorable selling price.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Overall, in terms of revenue from our continuing operations, our petfood sales to the China domestic market and overseas market both significantly decreased in 2022 as compared to 2021, mainly due to decreased sales volume of our products as affected by the negative impact of COVID-19 as discussed above, as well as decrease in sales orders, and our unfavorable selling price.
The loss recognized cannot exceed the total amount of goodwill allocated to that reporting unit. The Company recorded impairment of goodwill of $0, $355,570, and $0 for the years ended December 31, 2022, 2021 and 2020, respectively.
The loss recognized cannot exceed the total amount of goodwill allocated to that reporting unit. The Company recorded impairment of goodwill of $0, $0, and $355,570 for the years ended December 31, 2023, 2022 and 2021, respectively.
The functional currency of Tiandihui, Tiandihui Pet Foodstuffs, Tiandihui Foodstuffs Sales and Chongai Jiujiu, is Renminbi (“RMB”). The functional currency of TDH Group BVBA is Euro (“€”). The functional currency of TDH JAPAN is Yen (“¥”).
The functional currency of Tiandihui, Tiandihui Pet Foodstuffs, Tiandihui Foodstuffs Sales and Chongai Jiujiu, is Renminbi (“RMB”). The functional currency of TDH Group BVBA is Euro (“€”).
The Company recorded impairment loss on long-lived assets other than goodwill of $6,833, $217,257 and $0 and for the years ended December 31, 2022, 2021 and 2020, respectively. The Company’s goodwill is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.
The Company recorded impairment loss on long-lived assets other than goodwill of $1,954, $6,833 and $217,257 and for the years ended December 31, 2023, 2022 and 2021, respectively. The Company’s goodwill is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.
Net loss from discontinued operations On March 16, 2022, the People’s Court of Huangdao District, Qingdao City, Shandong Province made a civil ruling and announced the acceptance of creditors’ application of bankruptcy liquidation of Tiandihui, and it entered into bankruptcy proceedings. Accordingly, Tiandihui is now subject to the bankruptcy proceedings.
Net loss from discontinued operations On March 16, 2022, the People’s Court of Huangdao District, Qingdao City, Shandong Province made a civil ruling and announced the acceptance of creditors’ application of bankruptcy liquidation of Tiandihui, and it entered into bankruptcy proceedings.
Our operating loss as a percentage of total revenues was negative 98.36%, and negative 338.60% for the years ended December 31, 2022 and 2021, respectively. The continuous loss from operation was mainly due to increased operating expenses in 2022.
Our operating loss as a percentage of total revenues was negative 98.36%, and negative 338.60% for the years ended December 31, 2022 and 2021, respectively. The continuous loss from operation was mainly due to increased operating expenses in 2022. Income taxes expense from continuing operations .
Dollars for the purpose of preparing the consolidated financial statements were as follows (USD$1=RMB): Period Covered Balance Sheet Date Rates Average Rates Year ended December 31, 2022 6.9646 6.7261 Year ended December 31, 2021 6.3757 6.4515 The exchange rates used to translate amounts in Euro into U.S.
Dollars for the purpose of preparing the consolidated financial statements were as follows (USD$1=RMB): Period Covered Balance Sheet Date Rates Average Rates Year ended December 31, 2023 7.0827 7.0467 Year ended December 31, 2022 6.9646 6.7261 The exchange rates used to translate amounts in Euro into U.S.
Although we reported a net income of approximately $0.86 million in fiscal year 2022 as compared to a net loss of $6.7 million in 2021 and a net loss of $0.87 million in 2020, it is uncertain whether we may be able to continue to achieve profitability in the future.
We reported a net loss of approximately $23.63 million in fiscal year 2023 as compared to a net income of $0.86 million in 2022 and a net loss of $6.7 million in 2021, it is uncertain whether we may be able to continue to achieve profitability in the future.
This resulted in an increase of $0.6 million and $3.1 million in food service revenue for the years ended December 31, 2021 and 2022, respectively. In addition, we decided to discontinue our petfood manufacturing business segment in the first quarter 2023 due to the above operational challenges and focus on our restaurant segment.
This resulted in an increase of $3.2 million and $3.1 million in food service revenue for the years ended December 31, 2023 and 2022, respectively. We decided to discontinue our petfood manufacturing business segment in the first quarter of 2023 due to the operational challenges and we plan to focus on our restaurant segment.
We account for income taxes under the provisions of Section 740-10-30 of the FASB Accounting Standards Codification, which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements or tax returns.
We account for income taxes under the provisions of Section 740-10-30 of the FASB Accounting Standards Codification, which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. 36 The following factors affect our cost of revenues and expense.
In order to achieve profitability, among other factors, management must successfully execute our growth and operations in the markets on which we are focused. If we are unable to successfully take necessary steps, we may be unable to sustain or increase our profitability in the future.
In order to achieve profitability, among other factors, management must successfully execute our growth and operations in the markets on which we are focused. If we are unable to successfully take necessary steps, we may be unable to sustain or increase our profitability in the future. We face substantial challenges in our effort to resume normal business activities.
Dollars for the purpose of preparing the consolidated financial statements were as follows (USD$1=¥): Period Covered Balance Sheet Date Rate Average Rate Year ended December 31, 2021 115.0536 109.7430 Fair Value of Financial Instruments Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Dollars for the purpose of preparing the consolidated financial statements were as follows (USD$1=€): Period Covered Balance Sheet Date Rate Average Rate Year ended December 31, 2023 0.9012 0.9153 Year ended December 31, 2022 0.9383 0.9485 52 Fair Value of Financial Instruments Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
As of December 31, 2022 and 2021, the Company recorded contract liabilities of $11,024 and $16,959, respectively, which were presented as advances from customers on the accompanying consolidated balance sheets. During the years ended December 31, 2022, 2021 and 2020, the Company recognized $6,970, $163,074 and $56,983 of contract liabilities as revenue, respectively.
As of December 31, 2023 and 2022, the Company recorded contract liabilities of $4,045 and $11,024, respectively, which were presented as advances from customers on the accompanying consolidated balance sheets. During the years ended December 31, 2023, 2022 and 2021, the Company recognized $6,979, $6,970 and $163,074 of contract liabilities as revenue, respectively.
In addition, we decided to discontinue our petfood manufacturing business segment in the first quarter of 2023 due to the above operational challenges and focus on our restaurant segment.
We decided to discontinue our petfood manufacturing business segment in the first quarter of 2023 due to the above operational challenges.
We discontinued our petfood business during the first quarter of 2023 and currently our revenue is substantially generated from the restaurant business segment. Our business turnaround depends, in part, on our ability to successfully introduce manage and acquire new restaurants.
We discontinued our petfood business during the first quarter of 2023 and we fully disposed of Tiandihui in December 2023 as a result of the completion of the bankruptcy proceeding. Currently our revenue is substantially generated from the restaurant business segment. Our business turnaround depends, in part, on our ability to successfully introduce manage and acquire new restaurants.
There can be no assurances that future revenue or capital infusion will be sufficient to enable us to develop our business to a level where we will be profitable or continuously to generate positive cash flows.
Furthermore, our business operations may be further affected by the COVID-19 pandemic. There can be no assurances that future revenue or capital infusion will be sufficient to enable us to develop our business to a level where we will be profitable or continuously to generate positive cash flows.
The remaining lease term of the Company’s leases ranges from approximately 1 to 4 years.
The remaining lease term of the Company’s leases ranges from approximately 3 years.
The increase in our net loss was due to increased operating expenses as discussed above. Going Concern and Capital Resources Our consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.
Going Concern and Capital Resources Our consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.
The Company is evaluating the impact of this standard on its consolidated financial statements and disclosures. Impact of Inflation We do not believe the impact of inflation on our Company is material. Our operations are in China and China’s inflation rates have been relatively stable in the last three years: 3.7% in 2022, 1.1% in 2021, and 2.6% in 2020.
Our operations are in China and China’s inflation rates have been relatively stable in the last three years: 2.6% in 2023, 3.7% in 2022, and 1.1% in 2021. Impact of Foreign Currency Fluctuations We do not believe the impact of foreign currency fluctuations on our Company is material.
Our net loss from discontinued operations amounted to $339,054, $2,645,831 and $2,565,197 for the years ended December 31, 2022, 2021 and 2020, respectively. Net loss . As a result of the above, our total net income was $855,013 for the year ended December 31, 2022, compared to the net loss of $6,715,958 for the year ended December 31, 2021.
Our net loss from discontinued operations amounted to $15,095,547, $339,054 and $2,645,831 for the years ended December 31, 2023, 2022 and 2021, respectively. 41 Net loss . As a result of the above, our total net loss was $23,631,516 for the year ended December 31, 2023, compared to the net income of $855,013 for the year ended December 31, 2022.
December 31 2022 vs 2021 vs 2022 2021 2020 2021 2020 $ $ $ Oversea sales - 134,896 226,385 -100 % -40 % Domestic sales 25,849 308,267 382,497 -92 % -19 % Electronic commerce sales - 34,590 16,708 -100 % 107 % Restaurant revenue 3,074,007 606,463 - 407 % 100 % Less: Sale tax and addition (1,123 ) (3,121 ) (2,789 ) -64 % 12 % Total revenues from continuing operations 3,098,733 1,081,095 622,801 187 % 74 % Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 For the year ended December 31, 2022, for revenue generated from petfood sales of our continuing operations, our domestic sales decreased by $282,418 or 92%, and there was no e-commerce sales and overseas sales of petfood products.
December 31 2023 vs 2022 vs 2023 2022 2021 2022 2021 $ $ $ Pet food oversea sales - - 134,896 N/A -100 % Pet food domestic sales 754 25,849 308,267 -97 % -92 % Pet food electronic commerce sales - - 34,590 N/A -100 % Restaurant revenue 3,175,055 3,074,007 606,463 3 % 407 % Less: Sale tax and addition - (1,123 ) (3,121 ) -100 % -64 % Total revenues from continuing operations 3,175,809 3,098,733 1,081,095 2 % 187 % Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 For the year ended December 31, 2023, for revenue generated from petfood sales of our continuing operations, our domestic sales decreased by $25,095 or 97%, and there was no e-commerce sales and overseas sales of petfood products.
Our cost of revenues as a percentage of revenue was 66.03% and 71.21% for the years ended December 31, 2022, and 2021, respectively. Our cost of revenues is primarily comprised of the cost of our raw materials, labor and factory overhead.
Our cost of revenues as a percentage of revenue was 67.58% and 66.03% for the years ended December 31, 2023, and 2022, respectively. Our cost of revenues from our continuing operations is primarily comprised of the cost of our raw materials, labor and overhead costs.
Changes in fair value, including realized gain of approximately $0.07 million and unrealized gain of approximately $0.5 million for the year ended December 31, 2021, which were included in “investment income” in the accompanying consolidated statements of operations and comprehensive loss. 55 Accounts receivable Accounts receivable, net as of December 31, 2022 was $29,318, an decrease of $7,517 compared to $36,835 as of December 31, 2021. $29,421 and $19,221 allowance for credit losses was recorded for the years ended December 31, 2022 and 2021, respectively.
Changes in fair value, including realized gain of approximately $4.19 million and unrealized gain of approximately $0.03 million for the year ended December 31, 2022, which were included in “investment income” in the accompanying consolidated statements of operations and comprehensive loss. 47 Accounts receivable Accounts receivable, net as of December 31, 2023 was $4,961, a decrease of $24,357 compared to $29,318 as of December 31, 2022. $6,408 and $29,421 allowance for credit losses was recorded for the years ended December 31, 2023 and 2022, respectively.
Balance of taxes payable as of December 31, 2022 was $11,923 representing an decrease of $12,154, or 50%, compared with balance of $24,077 as of December 31, 2021. Tabular Disclosure of Contractual Obligations We have certain potential commitments that include future estimated payments.
Balance of taxes payable as of December 31, 2023 was $54,003 representing an increase decrease of $42,080, or 353%, compared with balance of $11,923 as of December 31, 2022. Tabular Disclosure of Contractual Obligations We have certain potential commitments that include future estimated payments.
The improvement in gross margin was mainly due to increased gross margin of our restaurant business and changes in related sales mix of food and beverage products in 2022 as compared to 2021. Our gross margin was 28.78% for the year ended December 31, 2021, compared with gross margin of27.79% for the year ended December 31, 2020.
The improvement in gross margin was mainly due to increased gross margin of our restaurant business and changes in related sales mix of food and beverage products in 2022 as compared to 2021.
The activities were mainly comprised of a net loss of $6,120,308, depreciation and amortization of $466,720, fair value change of short-term investments $495,265, bad debt provision $2,168 a decrease in net accounts receivable of $127,057, a decrease in Operating lease liabilities of $4,830,456, an increase in prepayment and other current net asset $793,726, an increase in other current liabilities of $793,726, and an increase in account payable of $64,427. 50 Net cash used in operating activities for the year ended December 31, 2020 totaled $2,156,774 (including cash flows of $755,118 used in operating activities from our continuing operations and cash flows of $1,401,656 used in operating activities from discontinued operations).
The activities were mainly comprised of a net loss of $6,120,308, depreciation and amortization of $466,720, fair value change of short-term investments $495,265, bad debt provision $2,168 a decrease in net accounts receivable of $127,057, a decrease in Operating lease liabilities of $4,830,456, an increase in prepayment and other current net asset $793,726, an increase in other current liabilities of $793,726, and an increase in account payable of $64,427.
As a result of the above, our total revenues from continuing operations for the fiscal year 2021 increased as compared with the fiscal year 2020. 45 The revenue generated from different product lines from our continuing operations are set forth as following: December 31 2022 vs 2021 vs 2022 2021 2020 2021 2020 $ $ $ Pet chews 8,367 46,112 59,096 -82 % -22 % Dried pet snacks 8,005 293,325 317,392 -97 % -8 % Wet canned petfood 1,290 10,760 84,117 -88 % -87 % Dental health snacks 550 6,127 19,915 -91 % -69 % Baked pet biscuits - - 3,132 N/A -100 % Restaurant revenue 3,074,007 606,463 - 407 % 100 % Others 7,637 121,429 141,938 -94 % -14 % Less: Sale tax and addition (1,123 ) (3,121 ) (2,789 ) -64 % 12 % Total revenues from continuing operations 3,098,733 1,081,095 622,801 187 % 74 % Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Our total revenue from continuing operations increased by $2,017,638 or 187% when comparing 2022 to 2021, among which, revenue generated from pet chews decreased by $37,745 or 82%, revenue from dried pet snacks decreased by $285,320 or 97%, revenue generated from wet canned petfoods decreased by $9,470 or 88%, revenue generated from dental health snacks decreased by $5,577 or 91%, from the year ended December 31, 2021 to the year ended December 31, 2022, respectively.
As a result of the above, our total revenues from continuing operations for the fiscal year 2022 increased as compared with the fiscal year 2021. 38 The revenue generated from different product lines from our continuing operations are set forth as following: December 31 2023 vs 2022 vs 2023 2022 2021 2022 2021 $ $ $ Pet chews - 8,367 46,112 -100 % -82 % Dried pet snacks - 8,005 293,325 -100 % -97 % Wet canned petfood - 1,290 10,760 -100 % -88 % Dental health snacks - 550 6,127 -100 % -91 % Restaurant revenue 3,175,055 3,074,007 606,463 3 % 407 % Others 754 7,637 121,429 -90 % -94 % Less: Sale tax and addition - (1,123 ) (3,121 ) -100 % -64 % Total revenues from continuing operations 3,175,809 3,098,733 1,081,095 2 % 187 % Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Our total revenue from continuing operations increased by $77,076 or 2% when comparing 2023 to 2022, among which, revenue generated from pet chews decreased by $8,367 or 100%, revenue from dried pet snacks decreased by $8,005 or 100%, revenue generated from wet canned petfoods decreased by $1,290 or 100%, revenue generated from dental health snacks decreased by $550 or 100%, from the year ended December 31, 2022 to the year ended December 31, 2023, respectively.
Loss from operations from continuing operations . Our loss from operations associated with our continuing operations was $3,048,016 for the year ended December 31, 2022, while our loss from operations was $3,660,592 for the year ended December 31, 2021.
The continuous loss from operation was mainly due to increased operating expenses in 2023. Our loss from operations associated with our continuing operations was $3,048,016 for the year ended December 31, 2022, while our loss from operations was $3,660,592 for the year ended December 31, 2021.
For the year ended December 31, 2022, our revenue from the restaurant business segment increased by approximately $2.5 million as compared to 2021 and we reported a net income of approximately $0.86 million and cash flows from operating activities of approximately $0.85 million in 2022.
For the year ended December 31, 2023, our revenue from the restaurant business segment increased by approximately $0.08 million as compared to 2022 and we reported a net loss of approximately $23.63 million and negative cash flows from operating activities of approximately $2.49 million in 2023. We discontinued our petfood manufacturing business segment in 2023.
Changes in fair value, including realized gain of approximately $4.19 million and unrealized gain of approximately $0.03 million for the year ended December 31, 2022.
Changes in fair value, including realized gain of approximately $0.44 million and unrealized loss of approximately $3.08 million for the year ended December 31, 2023.
Level 2 — Include other inputs that are directly or indirectly observable in the marketplace. Level 3 — Unobservable inputs which are supported by little or no market activity. Accounting guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach.
Level 3 — Unobservable inputs which are supported by little or no market activity. Accounting guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities.
Cash and cash equivalents and restricted cash As of December 31, 2022, cash and cash equivalents were $21,857,125, compared to $18,025,966 at December 31, 2021.
Cash and cash equivalents and restricted cash As of December 31, 2023, cash and cash equivalents were $13,661,382, compared to $21,857,125 at December 31, 2022.
Additionally, our remaining petfood manufacturing facility was frozen by the court and became subject to Tiandihui’s bankruptcy proceeding in 2022. We decided to discontinue our petfood manufacturing business segment in the first quarter 2023 due to the above operational challenges and focus on our restaurant segment.
Additionally, our remaining petfood manufacturing facility was frozen by the court and became subject to Tiandihui’s bankruptcy proceeding in 2022. We discontinued our petfood manufacturing segment during the first quarter of 2023.
As our revenue increased, our marketing campaign related costs and sales commission paid to our sales teams increased in 2022 as compared to 2021. General and administrative expenses from our continuing operations was $4,002,346, and $3,541,872 for the years ended December 31, 2022 and 2021 respectively, representing an increase of $460,474, or 13.00%.
General and administrative expenses from our continuing operations was $4,002,346, and $3,541,872 for the years ended December 31, 2022 and 2021 respectively, representing an increase of $460,474, or 13.00%. The main reason for the increase was mainly due to increased depreciation and amortization expenses related to our restaurant business.
The revenue generated from different countries from our continuing operations are set forth as following: December 31 2022 vs 2021 vs 2022 2021 2020 2021 2020 $ $ $ South Korea - 37,320 34,378 -100 % 9 % China 25,849 342,857 382,497 -92 % -10 % United Kingdom - - - N/A N/A % Germany - - - N/A N/A % U.S. 3,074,007 606,463 - 407 % 100 Other countries - 97,576 208,715 -100 % 53 % Less: Sale tax and addition (1,123 ) (3,121 ) (2,789 ) -64 % 12 % Total revenues from continuing operations 3,098,733 1,081,095 622,801 187 % 74 % “Other countries” is comprised of all countries whose revenues, individually, were less than 10% of the Company’s revenues. 46 Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Overall, in terms of revenue from our continuing operations, our petfood sales to the China domestic market and overseas market both significantly decreased in 2022 as compared to 2021, mainly due to decreased sales volume of our products as affected by the negative impact of COVID-19 as discussed above, as well as decrease in sales orders, and our unfavorable selling price.
The revenue generated from different countries from our continuing operations are set forth as following: December 31 2023 vs 2022 vs 2023 2022 2021 2022 2021 $ $ $ South Korea - - 37,320 N/A -100 % China 754 25,849 342,857 -97 % -92 % U.S. 3,175,055 3,074,007 606,463 3 % 407 % Other countries - - 97,576 N/A -100 % Less: Sale tax and addition - (1,123 ) (3,121 ) -100 % -64 % Total revenues from continuing operations 3,175,809 3,098,733 1,081,095 2 % 187 % “Other countries” is comprised of all countries whose revenues, individually, were less than 10% of the Company’s revenues. 39 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Overall, in terms of revenue from our continuing operations, our petfood sales to the China domestic market and overseas market both significantly decreased in 2023 and 2022, mainly due to the discontinuation of our pet food manufacturing business segment in the first quarter of 2023.
Additionally, our remaining petfood manufacturing facility was frozen by the court and became subject to Tiandihui’s bankruptcy proceeding in 2022. Accordingly, we sought strategic alternatives to the petfood industry and entered the restaurant segment on October 31, 2021, when we acquired 51% equity interests of Far Ling’s Inc and 100% equity interests of Bo Ling’s Chinese Restaurant, Inc.
Accordingly, we sought strategic alternatives to the petfood industry and entered the restaurant segment on October 31, 2021, when we acquired 51% equity interests of Far Ling’s Inc and 100% equity interests of Bo Ling’s Chinese Restaurant, Inc.
The increase in our net income was due to increased revenue from our restaurant business segment and increased investment income for the year ended December 31, 2022. 48 Our total net loss was $6,715,958 or the year ended December 31, 2021, compared to the net loss of $874,668 for the year ended December 31, 2020.
The increase in our net income was due to increased revenue from our restaurant business segment and increased investment income for the year ended December 31, 2022.
December 31, Country 2022 2021 China (Mainland) $ 1,777,357 $ 26,367 China (Hong Kong) 80,021 14,099,208 Hong Kong (through a broker account) 189,056 157,974 New Zealand (through a broker account) 16,246,621 1,232,822 U.S. 3,564,070 2,509,595 Total $ 21,857,125 $ 18,025,966 The majority of our cash balances at December 31, 2022 and 2021 are in form of USD and held in a broker accounts in New Zealand and Hong Kong and bank accounts at financial institutions located in China.
December 31, Country 2023 2022 China (Mainland) $ 371,807 $ 1,777,357 China (Hong Kong) 2,018,727 80,021 Hong Kong (through a broker account) 107,918 189,056 New Zealand (through a broker account) 8,477,703 16,246,621 U.S. 2,685,227 3,564,070 Total $ 13,661,382 $ 21,857,125 The majority of our cash balances at December 31, 2023 and 2022 are in form of USD and held in a broker accounts in New Zealand and Hong Kong and bank accounts at financial institutions located in China.
The activities were mainly comprised of a net income of $803,700, depreciation and amortization of $17,114, fair value change of short-term investments $4,161,093, inventory write-down of $11,532, a increase in prepayment and other current net assets of $1,017,261, an increase in other current liabilities of $1,054,749, and a decrease in accounts payable of $305,382.
The activities were mainly comprised of a net income of $803,700, depreciation and amortization of $17,114, fair value change of short-term investments $4,161,093, inventory write-down of $11,532, an increase in prepayment and other current net assets of $1,017,261, an increase in other current liabilities of $1,054,749, and a decrease in accounts payable of $305,382. 43 Net cash used in operating activities for the year ended December 31, 2021 totaled $3,299,563 (including cash flows of $8,154,363 used in operating activities from our continuing operations and cash flows of $4,854,800 provided by operating activities from discontinued operations).
There was no such goodwill impairment in 2022 and 2020. In connection with our acquisition of restaurant business, we recognized a goodwill of $355,570 as of the acquisition date. However, due to our significant net loss in fiscal year 2021, goodwill of $355,570 has been fully impaired for the year ended December 31, 2021.
Impairment of goodwill was $0, $0 and $355,570 for the years ended December 31, 2023, 2022 and 2021, respectively. There was no such goodwill impairment in 2023 and 2022. In connection with our acquisition of restaurant business, we recognized a goodwill of $355,570 as of the acquisition date.
The decrease in our selling expense was in line with our decreased petfood revenue in 2021. As our revenue declined, our distribution costs, sales promotion and marketing campaign related costs and sales commission paid to our sales teams decreased in 2021 as compared to 2020.
The increase in our selling expense was in line with our increased restaurant business segment revenue in 2022. As our revenue increased, our marketing campaign related costs and sales commission paid to our sales teams increased in 2022 as compared to 2021.
The continuous loss from operation was mainly due to increased operating expenses in 2021. Income taxes expense from continuing operations . Due to our continuous operating loss for the years ended December 31, 2022, 2021 and 2020, we reported minimal income tax benefit for those years.
Due to our continuous operating loss for the years ended December 31, 2023, 2022 and 2021, we reported minimal income tax benefit for those years.
Additionally, our remaining production facility was frozen by court order and became subject to Tiandihui’s bankruptcy proceeding in 2022. Accordingly, we sought strategic alternatives to the petfood industry and entered the restaurant segment on October 31, 2021, when we acquired 51% equity interests of Far Ling’s Inc and 100% equity interests of Bo Ling’s Chinese Restaurant, Inc.
Accordingly, we sought strategic alternatives to the petfood industry and entered the restaurant segment on October 31, 2021, when we acquired 51% equity interests of Far Ling’s Inc and 100% equity interests of Bo Ling’s Chinese Restaurant, Inc. and plan to focus on our restaurant segment.
On March 16, 2022, the People’s Court of Huangdao District, Qingdao City, Shandong Province made a civil ruling and announced the acceptance of creditors’ application of bankruptcy liquidation of Tiandihui, and it entered in bankruptcy proceedings.
Additionally, our remaining production facility was frozen by court order and became subject to Tiandihui’s bankruptcy proceeding in 2022. On March 16, 2022, the People’s Court of Huangdao District, Qingdao City, Shandong Province made a civil ruling and announced the acceptance of creditors’ application of bankruptcy liquidation of Qingdao Tiandihui Foodstuffs Co., Ltd., and it entered into bankruptcy proceedings.
Short-term investments During the years ended December 31, 2022 and 2021, the Company acquired equity securities of certain publicly listed companies through various open market transactions.
As legal proceedings have all been concluded, there are no restricted funds available as of December 31, 2023. Short-term investments During the years ended December 31, 2023 and 2022, the Company acquired equity securities of certain publicly listed companies through various open market transactions.
The Company measures certain financial assets, including the investment under the measurement alternative method and equity method on other-than-temporary basis, intangible assets and fixed assets at fair value when an impairment charge is recognized. 61 Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The Company measures certain financial assets, including the investment under the measurement alternative method and equity method on other-than-temporary basis, intangible assets and fixed assets at fair value when an impairment charge is recognized.
Operating expenses from continuing operations Operating expenses from our continuing operations were $4,100,549, and $3,971,720 for the years ended December 31, 2022 and 2021, respectively, an increase of $128,829, or 3.24%. The ratio of operating expenses as a percentage of revenue decreased from 367.38% for the year ended December 31, 2021 to 132.33% for the year ended December 31, 2022.
Operating expenses from continuing operations Operating expenses from our continuing operations were $7,399,751, and $4,100,549 for the years ended December 31, 2023 and 2022, respectively, an increase of $3,299,202, or 80.46%. The ratio of operating expenses as a percentage of revenue increased from 132.33% for the year ended December 31, 2022 to 233.00% for the year ended December 31, 2023.
Due to related parties As of December 31, 2022, the balances of due to related parties were $55,747, an increase of $19,337 compared to $36,410 on December 31, 2021.
Due to related parties As of December 31, 2023, the balances of due to related parties were $1,983,430, an increase of $1,927,683 compared to $55,747 on December 31, 2022.
This resulted in an increase of $0.6 million and $3.1 million in food service revenue for the years ended December 31, 2021 and 2022, respectively. 41 The following factors affected the revenues we derived from our operations from 2020 to 2022. COVID-19 Impact : In December 2019, a novel strain of coronavirus was reported in Wuhan, China.
This resulted in an increase of $3.1 million and $3.2 million in food service revenue for the years ended December 31, 2022 and 2023, respectively. 34 The following factors affected the revenues we derived from our operations from 2021 to 2023. COVID-19 Impact : Our operations may be further affected by the ongoing COVID-19 pandemic.
Results of Operations For the years ended December 31, 2022, 2021 and 2020 December 31 2022 vs 2021 vs 2022 2021 2020 2021 2020 $ $ $ Net revenues from continuing operations 3,098,733 1,081,095 622,801 186.63 % 73.59 % Cost of revenues from continuing operations 2,046,200 769,967 449,694 165.75 % 71.22 % Gross profit 1,052,533 311,128 173,107 238.30 % 79.73 % Gross margin 33.97 % 28.78 % 27.79 % N/A N/A Selling expense 91,370 74,278 85,744 23.01 % -13.37 % General and administrative expenses 4,002,346 3,541,872 583,594 13.00 % 506.91 % Impairment of goodwill - 355,570 - -100.00 % 100 % Loss from operations (3,048,016 ) (3,660,592 ) (496,231 ) 16.73 % -637.68 % Revenues from continuing operations .
Results of Operations For the years ended December 31, 2023, 2022 and 2021 December 31 2023 vs 2022 vs 2023 2022 2021 2022 2021 $ $ $ Net revenues from continuing operations 3,175,809 3,098,733 1,081,095 2.49 % 186.63 % Cost of revenues from continuing operations 2,146,215 2,046,200 769,967 4.89 % 165.75 % Gross profit 1,029,594 1,052,533 311,128 -2.18 % 238.30 % Gross margin 32.42 % 33.97 % 28.78 % N/A N/A Selling expense 90,659 91,370 74,278 -0.78 % 23.01 % General and administrative expenses 4,269,092 4,002,346 3,541,872 6.66 % 13.00 % Stock-based compensation expense 3,040,000 - - 100.00 % N/A Impairment of goodwill - - 355,570 N/A -100.00 % Loss from operations (6,370,157 ) (3,048,016 ) (3,322,141 ) 108.99 % 16.73 % 37 Revenues from continuing operations .
A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value: Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Accounting guidance establishes three levels of inputs that may be used to measure fair value: Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 — Include other inputs that are directly or indirectly observable in the marketplace.
Selling expense from our continuing operations was $91,370 and $74,278 for the years ended December 31, 2022, and 2021, respectively, an increase of $17,092 or 23.01%. The increase in our selling expense was in line with our increased restaurant business segment revenue in 2022.
The ratio of operating expenses as a percentage of revenue decreased from 367.38% for the year ended December 31, 2021 to 132.33% for the year ended December 31, 2022. Selling expense from our continuing operations was $91,370 and $74,278 for the years ended December 31, 2022, and 2021, respectively, an increase of $17,092 or 23.01%.
These factors raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date that our consolidated financial statements are issued. In assessing our liquidity, management monitors and analyzes our cash and cash equivalent, our ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments.
As a result, it is uncertain our future revenue and cash flows will be sufficient to support our growth. These factors raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date that our consolidated financial statements are issued.
Our loss from operations associated with our continuing operations was $3,734,079 for the year ended December 31, 2021, while our loss from operations was $496,231 for the year ended December 31, 2020. Our operating loss as a percentage of total revenues was negative 370.59%, and negative 79.68% for the years ended December 31, 2021 and 2020, respectively.
Our loss from operations associated with our continuing operations was $6,370,157 for the year ended December 31, 2023, while our loss from operations was $3,048,016 for the year ended December 31, 2022. Our operating loss as a percentage of total revenues was negative 200.58%, and negative 98.36% for the years ended December 31, 2023 and 2022, respectively.
The COVID-19 outbreak and spread further disrupted our business activities during the period from the beginning of 2020 up to May 2020 when we resumed our business operations. In order to diversify our revenue streams, on October 31, 2021, we acquired 51% equity interests of Far Ling’s Inc. and 100% equity interests of Bo Ling’s Chinese Restaurant, Inc.
We have resolved the legal challenges and resumed normal business operations In order to diversify our revenue streams, on October 31, 2021, we acquired 51% equity interests of Far Ling’s Inc. and 100% equity interests of Bo Ling’s Chinese Restaurant, Inc.
Impact of Foreign Currency Fluctuations We do not believe the impact of foreign currency fluctuations on our Company is material. Regarding purchase of raw materials, we are subject to commodity price risks arising from price fluctuations in the market prices of the raw materials. We have generally been able to pass on cost increases through price adjustments.
Regarding purchase of raw materials, we are subject to commodity price risks arising from price fluctuations in the market prices of the raw materials. We have generally been able to pass on cost increases through price adjustments. However, the ability to pass on these increases depends on market conditions influenced by the overall economic conditions in China.
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 For the year ended December 31, 2021, for revenue generated from petfood sales of our continuing operations, our overseas and domestic sales decreased by $91,489 and $74,230, respectively, and our e-commerce sales increased by $17,882 from the year ended December 31, 2020.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 For the year ended December 31, 2022, for revenue generated from petfood sales of our continuing operations, our domestic sales decreased by $282,418 or 92%, and there was no e-commerce sales and overseas sales of petfood products.
In the consolidated statements of operations and comprehensive income (loss), result from discontinued operations is reported separately from the income and expenses from continuing operations and prior periods are presented on a comparative basis.
On December 27, 2023, the court announced that the bankruptcy property distribution plan of Tiandihui was implemented and the bankruptcy proceedings were completed. In the consolidated statements of operations and comprehensive income (loss), results from discontinued operations is reported separately from the income and expenses from continuing operations and prior periods are presented on a comparative basis.
Net cash used in operating activities for the year ended December 31, 2021 totaled $3,299,563 (including cash flows of $8,154,363 used in operating activities from our continuing operations and cash flows of $4,854,800 provided by operating activities from discontinued operations).
Net cash used in operating activities for the year ended December 31, 2023 totaled $2,492,725 (including cash flows of $ 3,525,413 used in operating activities from our continuing operations and cash flows of $1,032,689 provided by operating activities from discontinued operations).
However, the ability to pass on these increases depends on market conditions influenced by the overall economic conditions in China. Most of our oversea sales are denominated in US dollars, for which our oversea sales are exempted from the risk of foreign currency fluctuation. We have not had any foreign currency investments hedged by currency borrowings or other hedging instruments.
Most of our oversea sales are denominated in US dollars, for which our oversea sales are exempted from the risk of foreign currency fluctuation. We have not had any foreign currency investments hedged by currency borrowings or other hedging instruments. We manage our price risks through productivity improvements and cost-containment measures 54
If we fail to maintain our reputation and competitive advantages, customers demand for our dining products and services could decline. In addition, competition in the restaurant industry is intense. We face sustained, intense competition from traditional, fast casual and other competitors, which may include many non-traditional market participants such as convenience stores, grocery stores, coffee shops and online retailers.
We face sustained, intense competition from traditional, fast casual and other competitors, which may include many non-traditional market participants such as convenience stores, grocery stores, coffee shops and online retailers.
During the year ended December 31, 2020, our cash used in operating activities was $2,156,774, cash provided by investing activities was $3,355,189, cash used in financing activities was $1,060,839, and had the positive effect of prevailing exchange rates on our cash of $106,910.
During the year ended December 31, 2023, our cash used in operating activities was $2,492,725, cash used in investing activities was $6,067,051, cash provided by financing activities was $1,921,554, and had the negative effect of prevailing exchange rates on our cash of $1,557,521.
The following factors affect our cost of revenues and expense. Price fluctuation of raw materials. For our petfood business , the raw materials purchase costs significantly impact our cost of goods sold. Any significant fluctuation of the market price of raw materials may negatively affect our operating results.
Price fluctuation of raw materials. For our petfood business , the raw materials purchase costs significantly impact our cost of goods sold. Any significant fluctuation of the market price of raw materials may negatively affect our operating results. Even if our current materials supply is relatively stable, we could be impacted by material price fluctuation in coming years.

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Employment Agreements Employment agreement with Dandan Liu, CEO On August 1, 2022, TDH Holdings, Inc. renewed employment agreement with Dandan Liu to serve in the role of Chief Executive Officer for the initial period of 3 years (commencing as of August 1, 2022 and terminating on July 31, 2025), which term may be automatically renewed for another 3 years unless either party to the agreement terminates the agreement at least 60 days prior to the expiration of the term.
Employment Agreements Employment agreement with Dandan Liu, CEO On August 1, 2022, TDH Holdings, Inc. renewed the employment agreement with Dandan Liu to serve in the role of Chief Executive Officer for the initial period of 3 years (commencing as of August 1, 2022 and terminating on July 31, 2025), which term may be automatically renewed for another 3 years unless either party to the agreement terminates the agreement at least 60 days prior to the expiration of the term.
A director may vote, attend a board meeting or sign a document on our behalf with respect to any contract or transaction in which he or she is interested.
A director may vote, attend a board meeting or sign a document on our behalf with respect to any contract or transaction in which he or she is interested.
A director must promptly disclose the interest to all other directors after becoming aware of the fact that he or she is interested in a transaction we have entered into or are to enter into.
A director must promptly disclose the interest to all other directors after becoming aware of the fact that he or she is interested in a transaction we have entered into or are to enter into.
A general notice or disclosure to the board or otherwise contained in the minutes of a meeting or a written resolution of the board or any committee of the board that a director is a shareholder, director, officer or trustee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company will be sufficient disclosure, and, after such general notice, it will not be necessary to give special notice relating to any particular transaction.
A general notice or disclosure to the board or otherwise contained in the minutes of a meeting or a written resolution of the board or any committee of the board that a director is a shareholder, director, officer or trustee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company will be sufficient disclosure, and, after such general notice, it will not be necessary to give special notice relating to any particular transaction.
The directors may receive such remuneration as our board of directors may determine from time to time.
The directors may receive such remuneration as our board of directors may determine from time to time.
Each director is entitled to be repaid or prepaid for all traveling, hotel and incidental expenses reasonably incurred or expected to be incurred in attending meetings of our board of directors or committees of our board of directors or shareholder meetings or otherwise in connection with the discharge of his or her duties as a director.
Each director is entitled to be repaid or prepaid for all traveling, hotel and incidental expenses reasonably incurred or expected to be incurred in attending meetings of our board of directors or committees of our board of directors or shareholder meetings or otherwise in connection with the discharge of his or her duties as a director.
The compensation committee will assist the directors in reviewing and approving the compensation structure for the directors.
The compensation committee will assist the directors in reviewing and approving the compensation structure for the directors.
Our board of directors may exercise all the powers of the company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the company or of any third party.
Our board of directors may exercise all the powers of the company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the company or of any third party.
In addition, our board has determined that Lei Wang qualifies as an “audit committee financial expert” as such term is currently defined in Item 407(d)(5) of Regulation S-K and meets the financial sophistication requirements of the NASDAQ rules. 67 Compensation Committee The Compensation Committee will be responsible for, among other matters: ● reviewing and approving, or recommending to the board of directors to approve the compensation of our CEO and other executive officers and directors; ● reviewing key employee compensation goals, policies, plans and programs; ● administering incentive and equity-based compensation; ● reviewing and approving employment agreements and other similar arrangements between us and our executive officers; and ● appointing and overseeing any compensation consultants or advisors.
In addition, our board has determined that Lei Wang qualifies as an “audit committee financial expert” as such term is currently defined in Item 407(d)(5) of Regulation S-K and meets the financial sophistication requirements of the NASDAQ rules. 59 Compensation Committee The Compensation Committee will be responsible for, among other matters: ● reviewing and approving, or recommending to the board of directors to approve the compensation of our CEO and other executive officers and directors; ● reviewing key employee compensation goals, policies, plans and programs; ● administering incentive and equity-based compensation; ● reviewing and approving employment agreements and other similar arrangements between us and our executive officers; and ● appointing and overseeing any compensation consultants or advisors.
The functions and powers of our board of directors include, among others: ● appointing officers and determining the term of office of the officers; ● authorizing the payment of donations to religious, charitable, public or other bodies, clubs, funds or associations as deemed advisable; 68 ● exercising the borrowing powers of the company and mortgaging the property of the company; ● executing checks, promissory notes and other negotiable instruments on behalf of the company; and maintaining or registering a register of mortgages, charges or other encumbrances of the company.
The functions and powers of our board of directors include, among others: ● appointing officers and determining the term of office of the officers; ● authorizing the payment of donations to religious, charitable, public or other bodies, clubs, funds or associations as deemed advisable; 60 ● exercising the borrowing powers of the company and mortgaging the property of the company; ● executing checks, promissory notes and other negotiable instruments on behalf of the company; and maintaining or registering a register of mortgages, charges or other encumbrances of the company.
Zou received her Associate’s degree in Administration Management from Shandong Normal University, and held Intermediate Accountant Qualification Certificate and Intermediate Economist Qualification Certificate in China. The Board of Directors determined that Ms. Zou should serve as our director based on her experience and expertise in accounting, management and internal controls. 63 Owens Meng is an independent director.
Zou received her Associate’s degree in Administration Management from Shandong Normal University, and held Intermediate Accountant Qualification Certificate and Intermediate Economist Qualification Certificate in China. The Board of Directors determined that Ms. Zou should serve as our director based on her experience and expertise in accounting, management and internal controls. 55 Owens Meng is an independent director.
As a smaller reporting company with a small board of directors, we believe it is appropriate to have the involvement and input of all of our directors in risk oversight matters. 66 Director Independence Our board has reviewed the independence of our directors, applying the NASDAQ independence standards.
As a smaller reporting company with a small board of directors, we believe it is appropriate to have the involvement and input of all of our directors in risk oversight matters. 58 Director Independence Our board has reviewed the independence of our directors, applying the NASDAQ independence standards.
Director Compensation Directors are entitled to receive compensation for their actual travel expenses for each Board meeting attended. We paid $10,000 compensation to each of our directors during each of the years ended December 31, 2022 and 2021.
Director Compensation Directors are entitled to receive compensation for their actual travel expenses for each Board meeting attended. We paid $10,000 compensation to each of our directors during each of the years ended December 31, 2023 and 2022.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted for our directors or officers under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable as a matter of United States law. 65 Retirement Benefits As of December 31, 2022, we have contributed to the government-mandated employee welfare and retirement benefit plan and provided pension, retirement or similar benefits to its employees.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted for our directors or officers under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable as a matter of United States law. 57 Retirement Benefits As of December 31, 2023, we have contributed to the government-mandated employee welfare and retirement benefit plan and provided pension, retirement or similar benefits to its employees.
A director is not required to hold shares as a qualification to office. 64 B. Compensation The following table shows the annual compensation paid by us for the years ended December 31, 2022 and 2021 to our principal executive officers.
A director is not required to hold shares as a qualification to office. 56 B. Compensation The following table shows the annual compensation paid by us for the years ended December 31, 2023 and 2022 to our principal executive officers.
Employment agreement with Feng Zhang, CFO On January 4, 2021, TDH Holdings, Inc. entered into an employment agreement with Feng Zhang to serve in the role of Chief Financial Officer for the initial period of three years, (commencing as of January 4, 2021 and terminating on January 3, 2024). Under the terms of this agreement, Mr.
Employment agreement with Feng Zhang, CFO On January 4, 2024, TDH Holdings, Inc. renewed the employment agreement with Feng Zhang to serve in the role of Chief Financial Officer for the initial period of three years, (commencing as of January 4, 2024 and terminating on January 3, 2027). Under the terms of this agreement, Mr.
We consider our relations with our employees to be good. 2020 2021 2022 Number of Employees 54 42 51 E. Share Ownership See Item 7 below. 69
We consider our relations with our employees to be good. 2021 2022 2023 Number of Employees 42 51 56 E. Share Ownership See Item 7 below. 61
Directors and senior management The following table sets forth our executive officers and directors, their ages and the positions held by them as of April 20, 2023: Name Age Position Dandan Liu 35 Chief Executive Officer, Class A Director Feng Zhang 40 Chief Financial Officer, Class A Director Caifen Zou (1) (2) (3) 58 Class B Director, independent Qiu Li (1) (2) (3) 62 Class B Director, independent Owens Meng (1) (2) (3) 45 Class C Director, independent (1) Member of the Audit Committee.
Directors and senior management The following table sets forth our executive officers and directors, their ages and the positions held by them as of April 29, 2024: Name Age Position Dandan Liu 36 Chief Executive Officer, Class A Director Feng Zhang 41 Chief Financial Officer, Class A Director Caifen Zou (1) (2) (3) 59 Class B Director, independent Qiu Li (1) (2) (3) 63 Class B Director, independent Owens Meng (1) (2) (3) 46 Class C Director, independent (1) Member of the Audit Committee.
Name and principal position Year Salary ($) Bonus ($) Total Paid ($) Dandan Liu 2022 85,000 35,000 120,000 CEO and director 2021 60,000 - 60,000 Feng Zhang 2022 45,000 - 45,000 CFO 2021 45,000 - 45,000 Compensation Committee Interlocks and Insider Participation None of our officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more officers serving as a member of our board of directors.
(2) Includes bonuses of $1,963,457 for the years 2019 to 2022. Compensation Committee Interlocks and Insider Participation None of our officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more officers serving as a member of our board of directors.
Added
Name and principal position Year Salary ($) Bonus ($) Total Paid ($) Dandan Liu 2023 95,000 (1) 1,998,457 (2) 2,093,457 CEO and director 2022 95,000 (1) 35,000 130,000 Feng Zhang 2023 58,000 (1) - 58,000 CFO 2022 58,000 (1) - 58,000 (1) Includes $10,000 received as compensation for serving as a director.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

15 edited+2 added−2 removed10 unchanged
Rongfeng Cui ceased to be the CEO of the Company effective August 2, 2019. Rongbing Cui Former Chief Financial Officer (“CFO”), Rongfeng Cui’s brother Feng Zhang Chief Financial Officer (“CFO”) Yanjuan Wang Rongfeng Cui’s wife Yan Fu Former Sales Vice President Yuxiang Qi Dandan Liu’s mother Tide (Shanghai) Industrial Co. Ltd.
Rongfeng Cui ceased to be the CEO of the Company effective August 2, 2019. Rongbing Cui Former Chief Financial Officer (“CFO”), Rongfeng Cui’s brother Feng Zhang CFO Yanjuan Wang Rongfeng Cui’s wife Yan Fu Former Sales Vice President Yuxiang Qi Dandan Liu’s mother Tide (Shanghai) Industrial Co. Ltd.
In March 2019, the agreement was further amended to, among others, reclassify unpaid interest payable to the principal of the loan, resulting in an increase of principal to RMB3,484,500 (approximately $539,000) and extend the maturity date from January 2019 to May 2019. As of December 31, 2022, the loan had $69,566 of interest outstanding.
In March 2019, the agreement was further amended to, among others, reclassify unpaid interest payable to the principal of the loan, resulting in an increase of principal to RMB3,484,500 (approximately $539,000) and extend the maturity date from January 2019 to May 2019. As of Dec. 31, 2022, the loan had $69,566 of interest outstanding.
B. Related Party Transactions The related parties had transactions for the years ended December 31, 2022, 2021 and 2020 consist of the following: Name of Related Party Nature of Relationship at December 31, 2021 Dandan Liu Chairman of the Board, Shareholder, Chief Executive Officer (“CEO”) Rongfeng Cui Former Chairman of the Board and Former CEO.
B. Related Party Transactions The related parties had transactions for the years ended December 31, 2023, 2022 and 2021 consist of the following: Name of Related Party Nature of Relationship at December 31, 2023 Dandan Liu Chairman of the Board, Shareholder, Chief Executive Officer (“CEO”) Rongfeng Cui Former Chairman of the Board and Former CEO.
(“Saike”) Owned by Rongfeng Cui and Yanjuan Wang Huangdao Ding Ge Zhuang Kangkang Family Farm (“Kangkang Family Farm”) Controlled by Rongfeng Cui’s father TDH Group BVBA A Belgium company solely owned by Rongfeng Cui prior to November 30, 2018; a wholly owned subsidiary of the Company since November 30, 2018 TDH JAPAN A Japanese company solely owned by Rongfeng Cui prior to November 30, 2018; a wholly owned subsidiary of the Company since November 30, 2018.
Owned by Rongfeng Cui and Yanjuan Wang Huangdao Ding Ge Zhuang Kangkang Family Farm Controlled by Rongfeng Cui’s father TDH Group BVBA A Belgium company solely owned by Rongfeng Cui prior to November 30, 2018; a wholly owned subsidiary of the Company since November 30, 2018 TDH JAPAN A Japanese company solely owned by Rongfeng Cui prior to November 30, 2018; a wholly owned subsidiary of the Company since November 30, 2018.
As a result, the corresponding loan was classified as current liability and included in short term loans – related parties as of December 31, 2021 and 2020. The Company is aware of the possible penalty and/or other consequence due to the default, however, no reasonable estimate can be made at this time.
As a result, the corresponding loan was classified as current liability and included in short term loans – related parties as of December 31, 2023 and 2022. The Company is aware of the possible penalty and/or other consequence due to the default, however, no reasonable estimate can be made at this time.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major shareholders The following table sets forth, as of April 18, 2023 certain information regarding beneficial ownership of our shares by each person who is known by us to beneficially own more than 5% of our shares.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major shareholders The following table sets forth, as of April 26, 2024 certain information regarding beneficial ownership of our shares by each person who is known by us to beneficially own more than 5% of our shares.
(“Tide”) Owned by Rongfeng Cui and Yanjuan Wang 70 Name of Related Party Nature of Relationship at December 31, 2021 Qingdao Like Pet Supplies Co., Ltd. (“Like”) Rongfeng Cui served as CEO, and Shuhua Cui, sister of Rongfeng Cui, served as the legal person.
Owned by Rongfeng Cui and Yanjuan Wang 62 Name of Related Party Nature of Relationship at December 31, 2021 Qingdao Like Pet Supplies Co., Ltd. Rongfeng Cui served as CEO, and Shuhua Cui, sister of Rongfeng Cui, served as the legal person.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting and investment power. Except as otherwise indicated below, each beneficial owner holds voting and investment power directly. The percentage of ownership is based on 10,323,268 shares issued and outstanding as of the record date.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting and investment power. Except as otherwise indicated below, each beneficial owner holds voting and investment power directly. The percentage of ownership is based on 10,323,268 shares issued and outstanding as of this Annual Report.
Short term loans from related parties December 31, December 31, 2022 2021 Rongfeng Cui $ 266,451 $ 285,878 Total $ 266,451 $ 285,878 In March 2018, TDH Group BVBA borrowed non-interest bearing, unsecured long term loans from Rongfeng Cui in the aggregate amount of €250,000 (approximately $288,000), of which €60,000 (approximately $69,000), €60,000 (approximately $69,000), €60,000 (approximately $69,000), €60,000 (approximately $69,000), €10,000 (approximately $11,500) and $0 is due in the years ended December 31, 2019, 2020, 2021, 2022, 2023 and thereafter, respectively.
Short term loans from related parties December 31, December 31, 2023 2022 Rongfeng Cui $ 277,408 $ 266,451 Total $ 277,408 $ 266,451 In March 2018, TDH Group BVBA borrowed non-interest bearing, unsecured long term loans from Rongfeng Cui in the aggregate amount of €250,000 (approximately $288,000), of which payments of €60,000 (approximately $69,000), €60,000 (approximately $69,000), €60,000 (approximately $69,000), €60,000 (approximately $69,000), €10,000 (approximately $11,500) and $0 were due in the years ended December 31, 2019, 2020, 2021, 2022, 2023 and thereafter, respectively.
The interest expenses for loans from related parties amounted to $0, $29,581 and $43,835 for the years ended December 31, 2022, 2021 and 2020, respectively. Accounts payable to related parties December 31, December 31, 2022 2021 Richard Ng $ 1,033 $ - Total $ 1,033 $ - C. Interests of Experts and Counsel Not required. 72
The interest expenses for the loans from related parties amounted to $0, $0 and $29,581 for the years ended December 31, 2023, 2022 and 2021, respectively. Accounts payable to related parties December 31, December 31, 2023 2022 Richard Ng $ - $ 1,033 Total $ - $ 1,033 C. Interests of Experts and Counsel Not required. 64
The Company did not make any repayment to Rongfeng Cui during the years ended December 31, 2019 and 2020 nor subsequently, such default may lead to callable of the loan at any time by Rongfeng Cui.
The Company did not make any repayment to Rongfeng Cui during the years ended December 31, 2013, 2022 and 2021, such failure to pay may lead to callable of the loan at any time by Rongfeng Cui.
Due to related parties from continuing operations Due to related parties consisted of the following: December 31, December 31, 2022 2021 Rongfeng Cui 33,624 32,401 Feng Zhang 22,123 1,568 Products Inc. - 2,441 Total $ 55,747 $ 36,410 71 The balance of due to related parties represents expenses paid by related parties on behalf of the Company as well as advances the Company obtained from related parties for working capital purposes.
Due to related parties from continuing operations Due to related parties consisted of the following: December 31, December 31, 2023 2022 Dandan Liu 1,963,457 - Rongfeng Cui - 33,624 Feng Zhang - 22,123 Products Inc. 19,973 - Total $ 1,983,430 $ 55,747 63 The balance of due to related parties represents expenses paid by related parties on behalf of the Company as well as advances the Company obtained from related parties for working capital purposes.
In June 2018, the Company entered into a loan agreement with Yuxiang Qi. Interest rate was 15% during the loan period and 24% for the period past due.
As a result, the loans are included in the loss from discontinued operation of Tiandihui for the year ended December 31, 2023. In June 2018, the Company entered into a loan agreement with Yuxiang Qi. Interest rate was 15% during the loan period and 24% for the period past due.
Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Qingdao Tiandihui Foodstuffs Co. Ltd., 2521 Tiejueshan Road, Huangdao District, Qingdao, Shandong Province, PRC.
Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Beijing Wenxin Co., Ltd., Room 1104, Full Tower, 9 East Third Ring Middle Road, Chaoyang District, Beijing, PRC.
(“Zhenyu”) Noncontrolling shareholder of Yichong prior to September 27, 2019; Sole shareholder of Yichong after September 27, 2019 Beijing Quanmin Chongai Information Technology Co., Ltd. (“Quanmin Chongai”) Rongbing Cui serves as supervisor of Quanmin Chongai LAI LINGS LENEXA Raymond Ng is the son of Richard Ng Products Inc.
Dissolved in February 2021. Qingdao Yinhe Jiutian Information Technology Co., Ltd. Solely owned by Rongbing Cui Huangdao Hanyinhe Software Development Center Co., Ltd. Solely owned by Xiaomei Wang Beijing Quanmin Chongai Information Technology Co., Ltd. (“Quanmin Chongai”) Rongbing Cui serves as supervisor of Quanmin Chongai LAI LINGS LENEXA Raymond Ng is the son of Richard Ng Products Inc.
Removed
Dissolved in February 2021. Qingdao Yinhe Jiutian Information Technology Co., Ltd. (“Yinhe Jiutian”) Solely owned by Rongbing Cui Huangdao Hanyinhe Software Development Center Co., Ltd. (“Hanyinhe”) Solely owned by Xiaomei Wang Zhenyu Trading (Qingdao) Co., Ltd.
Added
In connection with the bankruptcy proceedings of Tiandijhui, on December 27, 2023, the Court announced that the bankruptcy property distribution plan of Tiandihui was implemented and the bankruptcy proceedings were completed. Pursuant to the judgment and decision by the Court, loans payable plus accrued interest to be paid to Dandan Liu were not approved by the bankruptcy distribution plan.
Removed
Beginning in 2019 the Company was in default of this loan, and was subject to 24% annual interest rate. The Company analyzed the amendments under ASC 470-50 and concluded that these amendments did not qualify for debt modification.
Added
Pursuant to the judgment and decision by the Court in connection with the bankruptcy distribution plan, only RMB 94,270 (approximately $13,284) in principal of the loan was approved by the court. The Company made the payment of RMB 94,270 (approximately $13,284) to Yuxiang Qi in December 2023.

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